Social Security is not “going broke” because Social Security cannot go broke

Dan Crawford commends John T. Harvey’s blunt reminder, “Why Social Security Can’t Go Bankrupt.”

It is a logical impossibility for Social Security to go bankrupt. We can voluntarily choose to suspend or eliminate the program, but it could never fail because it “ran out of money.”

… It’s not a pension fund into which you put your money when you are young and from which you draw when you are old. It’s an immediate transfer from workers today to retirees today. That’s what it has always been and that’s what it has to be – there is no other possible way for it to work.

… This is how Social Security actually operates. As you can see, this needs no prior financing or savings, nor would that appear to be particularly helpful. At the national level, maintaining a class of retirees (whether via Social Security or private pensions) means redistributing existing output, not putting money under your mattress. Although you can run out of money for retirement, we, as a nation, cannot.

What, then, you may ask, is the Social Security Trust Fund, the pool of money that people say will dry up and make it impossible for anyone to receive their Social Security payments? It is the surplus that resulted from having collected more in taxes than was necessary to pay out to retirees. Let me say that again: it is how much existing workers were overtaxed relative to the need to pay retirees in the past. It was never the source of the money we’ve been paying to Social Security recipients all these years. Strictly speaking, it’s completely unnecessary if we are able to precisely and continuously match tax revenues and pay outs.

Yes. Please remember this: Anyone who tells you that Social Security is “going broke” is either lying to you or, at best, does not have the first clue how Social Security works.

Social Security is not going broke. Social Security cannot go broke.

It is not an account that can be depleted, it is an arrangement between generations. As long as there are generations, then Social Security will continue to exist.

There is no debt or deficit that can interfere with that arrangement. The arrangement, like any promise, can be deliberately broken, but it cannot go broke.

Only two scenarios can be imagined to make Social Security stop working:

1. Our grandchildren all turn out to be selfish assholes and oath-breakers, deciding en masse to screw over their retired parents and grandparents while also being so short-sighted as to invite their own children and grandchildren to screw them over in turn upon their retirement. If all of our children turn out to be evil and stupid, then Social Security will not be sustainable. But then if all of our children turn out to be evil and stupid, nothing else will be sustainable either.

2. Some kind of science-fiction, P.D. James, Children-of-Men scenario in which the human race mysteriously becomes incapable of reproducing. That would mean no future generation of workers to pay for Social Security benefits, and thus would entail the end of Social Security. But since it would also entail the end of everything else, including the human race itself, it’s hard to view such a potential problem as a flaw in the design of Social Security.

 

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  • aunursa

    … It’s not a pension fund into which you put your money when you are young and from which you draw when you are old. It’s an immediate transfer from workers today to retirees today. That’s what it has always been and that’s what it has to be – there is no other possible way for it to work.

    It is not an account that can be depleted, it is an arrangement between generations. As long as there are generations, then Social Security will continue to exist.

    It sounds like a government-mandated pyramid scheme.

  • EllieMurasaki

    A pyramid scheme is a thing where people on one level get two, four, or eight times what they paid in, provided a neverending supply of people who pay in. Social Security doesn’t work like that, for reasons including that the population is just not expanding that quickly and everyone knows it. Also, does anyone have numbers on average individual total pay-in and average individual total pay-out?

    Initially, yeah, it kind of did–but initially the age at which one could begin getting Social Security checks was mean life expectancy, so half of everyone who paid into the system was expected to never get a payout from it.

  • P J Evans

     They adjusted the system, back in 1984, to allow for increased life expectancy. (It turns out that the average lifespan after retirement hasn’t actually increased that much. Most of the increase is because fewer people die before adulthood.)

  • ohiolibrarian

     If fewer people die before adulthood, then more people are contributing during their working years. And this is another reason why our immigration “problem” is kind of a benefit … to the very people who are most opposed to immigration (immigrants usually skewing younger).

  • Sgt. Pepper’s Bleeding Heart

    They adjusted the system, back in 1984, to allow for increased life expectancy. (It turns out that the average lifespan after retirement hasn’t actually increased that much. Most of the increase is because fewer people die before adulthood.)

    If that’s true, then wow, the American demographic picture is very different to the Australian one.

  • aunursa

    Also, does anyone have numbers on average individual total pay-in and average individual total pay-out?

    This may help …
     Social Security and Medicare Taxes and Benefits Over a Lifetime (PDF)

  • EllieMurasaki

    Okay, thanks.

  • aunursa

    Thanks for providing an intelligent and thoughtful response.

  • SE

    The first person to retire paid 25 dollars and got 225000 in return. It is a pyramid scheme.

  • EllieMurasaki

    Mm-hm. What about the person who paid into the system all her life and died a year before she started getting payouts? How did she defraud anyone out of any money via Social Security? And yes, ‘defraud’ is the right word for anything for which ‘pyramid scheme’ is the right word. I truly hope you are not insinuating that your grandparents did/do not deserve to be supported by the society that they spent their lives supporting and contributing to.

  • http://loosviews.livejournal.com BringTheNoise

    Those two sentences don’t flow together as much as you seem to think.

  • http://blog.trenchcoatsoft.com Ross

     

    The first person to retire paid 25 dollars and got 225000 in return. It is a pyramid scheme.

    Kevin Spacey, would you mind assessing that statement?

    http://www.youtube.com/watch?v=tRVUOGUmxJI&feature=youtu.be&t=7s

    Thank you.

    Social Security works exactly the same way insurance works. It is not an investment account. It is not a pyramid scheme. You can tell because pyramid schemes fraudulent investment accounts ,whereas social security is not an investment, and not fraudulent and the payout is guaranteed by law.

    Please stop promoting a pernicious lie spread by wealthy investors greedy to steal the financial security of americans in order to play the ponies on wall street for the benefit of no one but themselves.

  • aunursa

    Social Security works exactly the same way insurance works.

    I’m not sure about that.  Unlike social security, some forms of insurance are optional, and even for those that are required, there are several different options.  People purchase insurance in order to protect their financial position from unexpected losses/expenses, whereas social security provides coverage for expected retirement expenses.  I don’t think that an insurance company can unilaterally change the terms of an insurance policy during the policy period. (They could change the terms at renewal, and the policyholder can choose whether or not to continue with the same policy or company.)  The government can change the terms of social security — raising the age for benefits, reducing benefits, providing means testing, etc.

  • JustoneK

    In what way is regular more private insurance optional?

  • EllieMurasaki

    People purchase insurance in order to protect their financial position from unexpected losses/expenses, whereas social security provides coverage for expected retirement expenses.

    Funny, my health and dental insurance covers my expected expenses in those categories. Not in their entirety, I have copays, but mostly.

    Strangely enough, I’m in favor of government-funded universal medical and dental and social security, and in favor of the current system for auto and home insurance.

  • Daughter

     And life insurance, of course, protects against a completely predictable event: everyone dies. You may not know when, unlike having a general idea when you’ll retire, but you know it will happen.

  • reynard61

    “The first person to retire paid 25 dollars and got 225ooo in return.”

    Nope.

    And in the case that you didn’t even bother to correctly cite, Ms. Fuller lived well beyond her statistical expiration date; so, yes, she came out on the better end of that particular deal. But not *everyone* on Social Security lives that long, and odds are that quite a few people who *do* pay into the system die *before* they retire and get to collect their benefits.

  • Lori

     

    It sounds like a government-mandated Ponzi or pyramid scheme.  

    And with this you once again prove the old adage that we see the world not as it is, but as we are.

  • marvin nubwaxer

     mostly people see through ignorant bigot, selfish, short sighted eyes that rely on information they get from right wing radio, fox news and republican politicians.  the right has their own massive industry of  propaganda which is mostly for consumption by other right wingers.

  • LoneWolf343

    *cue Morbo* FRAUD DOES NOT WORK THAT WAY!

  • http://blog.trenchcoatsoft.com Ross

    If Ponzi schemes worked the way Social Security does, they wouldn’t be illegal.

  • depizan

    Only if you have no idea what Ponzi or pyramid schemes are.

  • http://twitter.com/shay_guy Shay Guy

    Question: Do you seriously think this? Or are you simply ferrying a talking point over from the other side for the sake of “balance”? If one group of people says 2+2=4 and another says 2+2=5, it’s not necessary to tell the first, “Well, I heard it was five.” And a simple Google search can give you any number of reasons why this one isn’t true.

    Workers pay $X in taxes. Retirees get $Y during the same period. If X>Y, put $(X-Y) in the trust fund; if Y>X, take $(Y-X) from the trust fund. If Y>X and the trust fund is running low, either increase X or decrease Y.

    Anything wrong with the logic there?

  • Baby_Raptor

    Okay, you toted out your tired, disproven Republican talking point for the article. Do you feel better now?

  • Lori

    Deleated

  • http://twitter.com/FearlessSon FearlessSon

    I think that part of the issue is when a succeeding generation is smaller than the proceeding one, the relative burden becomes a lot heavier, and if that newer generation is in an economic climate where they are paid little and have few opportunities  there is that much less to pass on to the retirees.  

    It certainly does not mean that Social Security will be broke, but that does not mean that it might not need corrective maintenance.  This maintenance is less about fixing Social Security itself, and more about fixing the economic context it is paid in though.  

  • P J Evans

     The fastest way to make it work better would be to raise the income cap on contributions. Ideally, there would be no income cap, but that ain’t gonna happen.

  • http://www.facebook.com/paulwilczynski Paul Wilczynski

    Raising the income cap on contributions would only if you also did not pay out more to those who earned more, as Social Security does now.

  • P J Evans

     It isn’t paying enough to live on. Right now, I’d get just over $1000 a month. That’s with something like 30 years work.Unemployment would get me more money.
    NO ONE gets rich on SS, no matter what you’ve been told.

  • AnonymousSam

    Now, see, that makes me angry. It’s a pittance, but $1000 a month would still be more than I was making at my more-than-twice-full-time-hours job in the past. That’s not an argument against social security or unemployment; it’s an argument against eliminating minimum wage, because I can’t see it not leading into ridiculously low wage jobs like the one I had.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Why is there a need to make a magic link between earnings you are taxed on and pension payouts? In a typical defined benefit plan it doesn’t matter how much you pay in.

    Government plans are a hybrid of defined contribution and defined benefit, but the point is that the defined benefit part means there is really no link to earnings in one’s prime years.

    So raise the cap on contributions, set a pension floor income that enables any senior citizen to live well, and be done with it.

  • Daughter

    But can we predict that succeeding generations will always be smaller? For example, there are fewer Gen Xers than baby boomers, but there are more millenials than Gen Xers.

  • http://twitter.com/shay_guy Shay Guy

    I think that part of the issue is when a succeeding generation is smaller than the proceeding one, the relative burden becomes a lot heavier, and if that newer generation is in an economic climate where they are paid little and have few opportunities there is that much less to pass on to the retirees.

    Now you’ve got me thinking about Japan’s economic problems. :(

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    All government pension plans are run this way, on a pay-in/pay-out basis. Even Canada’s still mostly does, although part of it is invested in the stock market (and look how well that’s turning out – not!) these days.

    The only reason you can’t run a corporate pension plan this way is because governments live forever, in theory. Corporations can and do go under, so the fund that pays out pension benefits can’t be a flow, it has to be a pool.

    There’s no mystery and there’s no omgPonziScheme to this.

  • http://blog.trenchcoatsoft.com Ross

    Also, the whole “Social security runs out of money in 20 years” thing is based on federally mandated calculations which assume that the economy will crash continuously for 20 years. The calculation isn’t “How long will social security last given how things are going,” but  “How long could social security last even in the worst possible scenario.” 

    Frankly, if the economy does poorly enough for this to happen, we will have worse problems than social security becoming insolvent.

    Also, of course, the conventional wisdom about social security assumes that baby boomers are immortal. That’s the basic concern: “O noes! Baby boomers are retiring! Not enough gen-xers to pay into the pot!” is only a problem if you assume that the baby boomers will live forever, making this a permanent state of affairs, rather than a temporary blip that will correct itself as the millennials enter the workforce, and eventually reverse itself as the baby boomers die off and the comparatively small Gen X workforce retires.

  • Carstonio

    I’ve heard the baby boomer argument from many people for a number of years. While they acknowledge that the blip would be temporary, they also insist that will be fairly large and long, lasting at least a couple of generations. From my listening, they’re making questionable assumptions about the demands that the boomers will make on the system and the ability of Xers to pay into it. I suspect that some of them imagine the latter generation to be slackers.

  • http://lliira.dreamwidth.org/ Lliira

    Also, of course, the conventional wisdom about social security assumes that baby boomers are immortal.

    Baby boomers certainly seem to think they are, and that the world will end when they do. *grumble* Can one be a curmudgeon about one’s parents’ generation? 

  • P J Evans

     This boomer will be surprised to be alive in fifteen years. *grumble*

  • Sgt. Pepper’s Bleeding Heart

    Baby boomers certainly seem to think they are, and that the world will end when they do. *grumble* Can one be a curmudgeon about one’s parents’ generation?

    You can if you’re Gen X! Resenting Baby Boomers is one of our things.

  • Carstonio

    Mostly I stay away from generational chauvinism, because there’s nothing unique or objective about it. It may be natural for each generation to believe that it invented sex and recreational substances, to see the previous generation as ignorant and backward and to see the succeeding one as clueless and indolent. There were probably older Cro-Magnons who used the standard what’s-with-these-kids-today rant when the younger ones began using fire to cook meat.

    A huge percentage of the Tea Partyers are old enough to remember the waning days of legal segregation and the battles over civil rights. Still, I’ve heard the same resentment over losing privilege from people as young as 17.

  • AnonaMiss

    Speaking of Cro-Magnons and the kids these days rant, SMBC Theater had a great sketch on the subject that also spawned a minor meme. http://www.youtube.com/watch?v=i_APoSfCYwU

    BIGGEST GENERATION IS BEST GENERATIONAnywhodle as a member of the Millennials I have an observation about a subset of us and our ‘group psychology’ with some overlap into Gen Y. In my limited and mostly internet-based experience, the border set of Gen Y and Millenial, roughly those born from 1980-1990, have a different outlook from those born before and those after. I attribute this to becoming aware of the world after the Reagan years, but before 9/11. I feel like we have a different idea of “normal” than those who started being aware of the world during the cold war, and those who started being aware of the world when the War On Terror was in full swing. Our “normal” is the Bush I/Clinton era; our collective Good Old Days, what we’re subconsciously trying to reproduce the same way the Boomers try to reproduce the 50s, was actually the good old days in this country, objectively better than what went before and came after, in terms of rate of technological development & public adoption, economic growth, civil liberties, etc…

    I was born near the end of that border interval, so I have a hard time articulating how damaged, how far from my baseline “normal” the world feels like it has become. I suspect y’all, who are mostly older than me, will know what I mean – the watershed in our culture that 9/11 became.

    The younger Millennials – 1990-2000 – don’t remember what the country was like before 9/11. Endless fearmongering, reactionary Christianism, warrantless wiretapping, etc, are normal to my little sister. And while the younger Millennials share many values with the older Millennials/younger GenY – e.g. comfort with rapidly changing technology, free culture, relaxed attitudes towards QUILTBAGs – they don’t have the context to understand in their bones that the culture has regressed. They don’t remember what it regressed from. And of course, for those old enough to have normalized the Cold War mentality, the Bush I/Clinton years were a blip, a temporary sunny spot in a baseline fearful worldview.

  • Carstonio

    Wow. Excellent point about regression. I view the 1960s, the Clinton years and the Obama years as generally struggles to reduce privilege, and the Reagan Revolution and the GWB years as backlashes aimed at preserving or expanding privilege. DADT may have been discriminatory but it was an improvement on what came before. And until the 1990s, it was very rare for women to become Senators through general elections.

  • AnonaMiss

    I find it intriguing that you completely left out the 70s. What’s your opinion on them? And in case I’m coming off as accusatory (“Y U NO MENTION 70S?!”), that’s an honest question driven almost entirely by curiosity and a tiny bit by a concern I’ll get to below.

    OK so I’m a little bit concerned by the idea of the 1960s as a time of struggle to reduce privilege. Obviously I didn’t live through this stuff and am just going off of what I’ve absorbed so please correct me/give your opinions/don’t think I’m telling you NO IT WAS THIS WAY.

    When I think of major social movements of the 60s I think of 3 things: racial civil rights, the anti-draft movement, and sexual liberation. 

    Racial civil rights falls squarely in the struggle against privilege/prejudice/etc., no argument there. 

    The anti-draft movement seems the opposite to me, though. We know what the class/privilege makeup of a ‘volunteer’ army is: even more lopsided than a draft with college deferment. As far as I know, no one was protesting the privilege that the wealthy and/or white-and-smart (because merit-based scholarships were still big enough and common enough to pay your way…) could get deferments, while the rest of the country could not. So the university-centered anti-draft protests strike me as being born out of privileged youth’s fear for/desire to keep their privilege and their friends’ privilege (of not having to risk their lives in the war) past graduation. Or is that too cynical of me?

    As for the sexual revolution, the time gap between “You can have sex with as many people as you want and that’s OK!” and “You need to listen to a woman when she says no” (heteronormativity sic) becoming cultural memes is deeply troubling to me. There’s about 10 years there of the privileged being “liberated” to pursue the underclass as they wished, without cultural acknowledgement that the underclass had the right to say no. This also strikes me as being the opposite of a struggle against privilege.

    This was the tiny bit of concern I had about you leaving out the 70s entirely, because the 70s were when women’s lib/feminism came about in a big way, which I would have thought would make the list.

  • Carstonio

    You’re right that the women’s liberation movement had its largest push in the 1970s even though it began earlier. I think of the movement as more 1960s in spirit. And the modern gay rights movement began in 1969. The 1970s are when the backlash against those movements started – school busing protests, the Bakke decision, and the birth of the religious right.

    So the university-centered anti-draft protests strike me as being born
    out of privileged youth’s fear for/desire to keep their privilege and
    their friends’ privilege (of not having to risk their lives in the war)
    past graduation. Or is that too cynical of me?

    Not only cynical but inaccurate. That’s mostly right-wing anti-intellectual revisionism. The polls I’ve seen from the period show that people with higher levels of income and education actually supported the war more, and this included college students. Poorer people, and college students from poorer backgrounds, tended to oppose the war more. Makes sense, given the disproportionate impact on the latter.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    The anti-draft movement seems the opposite to me, though.

    Are you forgetting the part where it’s mostly rich old white guys who can start wars by sending poor young any-color guys off to fight them?

  • depizan

     The draft protests were also part of the _war_ protests.  It’s not surprising that people didn’t want to be drafted to fight a war they didn’t think we should’ve been fighting at all. I’m not sure how that fits into the privilege issue.  (Which isn’t to say that there weren’t people involved just because _they_ didn’t want to go to war.)

    And there were a lot of college students at the time who were first generation college students – that is to say, decidedly not from privileged backgrounds.

    I also had the impression that the sexual revolution and the rise of feminism were much more linked than you suggest.  Right to abortion, availability of birth control, freedom to divorce, freedom to admit liking sex, those all seem to be part of both.

    Then again, these are things before (or effectively before) my time.

  • http://twitter.com/shay_guy Shay Guy

    Huh? I thought Generation Y and the Millennial Generation were the same thing. (Wikipedia seems to agree.)

  • AnonaMiss

    Huh? I thought Generation Y and the Millennial Generation were the same thing. (Wikipedia seems to agree.)

    My bad; read that as X then! (I thought it went boomer -> X -> Y -> Millennial, but my observations on the Millennials and their immediate predecessors remain the same whatever you call their immediate predecessors ^^.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    the Bush I/Clinton years were a blip, a temporary sunny spot in a baseline fearful worldview.

    That’s something someone I was talking to commented on. He said in the 1990s, it felt like we all breathed out and relaxed a little bit.

    And now we’re back to being paranoid of the 5 Muslims collectively representing the jihad on this continent.

  • Dean

    Well, here’s the thing, I’m convinced that baby boomers PLAN on living forever.  I’m not sure they will be satisfied until they suck every last resource from this country and leave the rest of us with a dried up husk.  The problem really isn’t social security, everyone in the know understands this.  You can tweak SS here and there and it will be good to go for a very long time.  The true problem is with Medicare.  The baby boomers are retiring at a time when medical technology is going to be able to keep them alive for a very long time, albeit at the cost of resources for everyone else.  I don’t think anyone really has an answer for this, but don’t think that this is as simple as waiting around for people to die off, extreme longevity is not as far off as you might think.

  • ohiolibrarian

     OTOH, Boomers are less likely to have spent 30 years at hard physical labor than their parent’s generation and the medical technology and knowledge available is likely to make their old age healthier. Active seniors are more likely to  voluntarily continue to work or begin another career/business thereby continuing to contribute to Social Security and Medicare.

  • Lori

     

    extreme longevity is not as far off as you might think.   

    Possibly extreme longevity for the top few percent of wealth-holders, not for the rest of us. This is an argument for lifting the FICA cap, not for fundamentally changing the system.

  • http://beingperfectlyhuman.blogspot.com/ Eric Fry

    “1. Our grandchildren all turn out to be selfish assholes and oath-breakers”

    How can our descendants be oath-breakers to an oath they did not take? As far as the “selfish asshole” part, you’re doing nothing but engaging in useless ad hominems. I thought you were trying to lift yourself above that, but perhaps, I’m wrong…

  • Lori

    Are you really sure you want to go with “I didn’t ask to be born?” as your argument? Because that’s what this boils down to, and the logic of a petulant teenager is rarely a credit to an adult.

  • http://beingperfectlyhuman.blogspot.com/ Eric Fry

    More ad hominems. Bravo.  I suppose that you believe your oath (or your forefather’s oath) to be something sacred that is binding upon every generation. Nice try at a strawman deflection, but your position is clearly the one of the petulant teenager. One generation has no right to force its will upon a different generation, but I suppose you don’t really like any sort of freedom unless it suits your agenda, do you?

  • EllieMurasaki

    Oh, so if the twentysomethings of the US collectively say ‘fuck capitalism, it’s not helping us any, let’s try socialism and see if that works any better’, the fortysomethings and sixtysomethings of the US have no right to impose capitalism upon the twentysomethings?

    I am down with that.

  • JustoneK

    Can we do that?  I’d like to try that.  Do we need a petition?

  • http://beingperfectlyhuman.blogspot.com/ Eric Fry

    If the twenty-somethings can make an appropriate change within the constraints of the Constitution and existing law, then yes. But your assumption is a misanthropic one, assuming that people can only learn by experience and not by example (and it may be quite valid, looking at some examples of today’s society.)

    Now, however, I have learned from experience that the comment section of this blog is much less of a place for intelligent discourse than it is a place for propagandist positions and trolling.

  • EllieMurasaki

    You didn’t say anything about the Constitution or existing law.

    Yeah, that might have something to do with how you came in spoiling for a fight.

  • http://beingperfectlyhuman.blogspot.com/ Eric Fry

    No, I didn’t come in spoiling for a fight, I merely commented on the language used in the post. If you saw that as spoiling for a fight (which you certainly did) you might want to take a look at yourself before you go around slinging your invective, because you’re the one that was looking for a fight that wasn’t even there. 

  • Lori

    So you’re picking this fight entirely over “ingrate” vs “oath-breaker”?

  • EllieMurasaki

    I think we are having a failure to communicate. When I say ‘ad hominem’, I mean an attack on the person making an argument, not on the argument itself or on someone not making the argument. When I say ‘misanthropic’, I mean ‘hating or disliking humanity’, not–well, whatever it is you meant. And when I say ‘invective’, I mean something along the lines of ‘Fuck you sideways, you fucking fuckwit, and the horse you rode in on too’.

    Please observe how I have not, until just now and that only to provide an example, actually used any swear words in this thread.

  • ohiolibrarian

     Buh bye, Troll.

    Oh, you meant WE are trolls? Because we don’t like your condescension and LACK OF VALID POINTS? Because your feelings are hurt that other people don’t just accept your “arguments” as wisdom?

  • ohiolibrarian

     Note that Social Security IS existing law and the Constitution was a commitment made many generations ago. And yet, you seem to think that the Constitution and existing law should remain valid (well, except Social Security, I guess). So, how does that work with your contention that a decision by one generation shouldn’t obligate later generations?

  • P J Evans

    I have learned from experience that the comment section of this blog is
    much less of a place for intelligent discourse than it is a place for
    propagandist positions and trolling.

    You’re here commenting. That tells us a lot about how much you don’t like the place.

  • http://blog.trenchcoatsoft.com Ross

    Now, however, I have learned from experience that the comment section of
    this blog is much less of a place for intelligent discourse than it is a
    place for propagandist positions and trolling.

    Translation: “I have learned from experience that the comment section of this blog is a place where reciting tired and debunked arguments and a bullying tone doesn’t let me dominate conversation and silence people whose positions are based on something other than arrogance, selfishness, and propaganda.”

  • Sgt. Pepper’s Bleeding Heart

    (Someone else has probably already addressed this, but I have 120 more comments to thread through; anyway it can’t hurt to be said twice)

    Why does the generation who wrote your constitution have any right to inflict their will on subsequent generations?

    (…aaaand, Lori said exactly that 2 posts later. Bravo on the reading ahead, self)

  • http://profiles.google.com/marc.k.mielke Marc Mielke

    I’m over forty. Can I say ‘fuck capitalism, let’s try socialism’ too? 

  • EllieMurasaki

    I don’t see why not.

  • EllieMurasaki

    And, shit, when I told whatsthetroll I hadn’t been swearing…oops.

  • http://profiles.google.com/marc.k.mielke Marc Mielke

    It’s okay. Looks like he stuck the flounce. 

  • http://twitter.com/lesterhalfjr Chris Hadrick

    ha! I knew it

  • EllieMurasaki

    And your point is…

  • Lori

     

    More ad hominems. Bravo.  I suppose that you believe your oath (or your
    forefather’s oath) to be something sacred that is binding upon every
    generation. Nice try at a strawman deflection, but your position is
    clearly the one of the petulant teenager. One generation has no right to
    force its will upon a different generation, but I suppose you don’t
    really like any sort of freedom unless it suits your agenda, do you?  

     

    If the twenty-somethings can make an appropriate change within the constraints of the Constitution  

    Why should they be constrained by the Constitution? They didn’t agree to it. It’s not their signatures on the bottom. It’s just a previous generation forcing its will on a different generation.

  • Kubricks_Rube

    One generation has no right to force its will upon a different generation

    That is a wholly different argument and calls into question all precedent of law. Fred’s point is not being made for those who oppose Social Security on principle. It’s for those who ostensibly support the program but either want to change how it works and/or don’t understand how it works (thanks, in large part, to those who do want to get rid of it altogether).

  • Eminnith

    ” I suppose that you believe your oath (or your forefather’s oath) to be something sacred that is binding upon every generation.”

    That’s how human society works, Eric.

  • ohiolibrarian

     So, I guess you don’t discipline your kids because that would be one generation forcing its will upon a different generation. Glad to know who to blame for some of the less than well behaved ones then. Now, every time I hear some kid having a tantrum or behaving badly, I can say, “That must be Eric Fry’s kid”.

    It also explains a LOT about today’s Republican party.

  • Madhabmatics

     yes we owe nothing to society, burn it all down, chaos reigns

    -a libertarian

  • http://profiles.google.com/marc.k.mielke Marc Mielke

    You’re the first person I’ve seen who makes libertarianism sound attractive. BLOOD AND SOULS FOR ARIOCH!

  • Madhabmatics

     http://www.youtube.com/watch?v=Vmn9asN-8AE

  • Tricksterson

    I started to like this then realized that you think thats a bad thing.

  • http://blog.trenchcoatsoft.com Ross

     Look, I gwet it, you want to destroy civilization. YOu may have deluded yourself into thinking that’s not what you’re doing, but it is.

    That is abominable behavior. Don’t expect us to let you do it without a fight.

  • Baby_Raptor

    “One generation has no right to force its will upon a different generation”

    So you don’t support restrictions on a woman’s right to choose, or who can marry whom, or pot, right? Because the younger generation is all for bodily autonomy, marriage equality and the decriminalization of weed. It’s the older generation that is trying to legislate these thins into oblivion. 

    Should the younger generation be able to make it’s own laws to live by, since this is obviously a case of one generation forcing it’s will on another?

    Or do you only say that when it comes to things like “big government”?

  • Morilore

    I’ll agree that “oath-breakers” is not quite the most felicitous term, in that it opens a door for all kinds of too-easy tone trolling, as you have aptly demonstrated.  I would have chosen the word “ingrates.”

  • http://beingperfectlyhuman.blogspot.com/ Eric Fry

    “Ingrate” would have been a much more appropriate term for “oath-breaker” in this context. 

  • ohiolibrarian

     If our grandchildren are willing to kick their own (and everyone else’s) grandparents in the face, what would you call them?

  • John (not McCain)

    People who kick their own and everyone else’s grandparents in the face can with certainty be called conservatives.

  • Carstonio

    This is part of a larger failure (or refusal) to understand that economies and governments don’t work like household budgets, and I say this knowing that my own economic knowledge is lacking. This is the background to the fights over the debt limit and sequestration. Party and ideology aside, it seems to be rooted in anti-intellectualism.

    I’ve encountered quite a few people who do believe in the threat of underreproduction, but it’s conveniently limited to nations with mostly white populations, and usually takes the form of antifeminism.

  • Consumer Unit 5012

     This is the background to the fights over the debt limit and sequestration.

    No, the background to those fights is that the Republicans will say and do ANYTHING to impede the Democrats, especially the Kenyan Usurper. 

    Note how much they cared about deficits when Bush was in charge. 

  • Carstonio

    You’re right about the obstructionism. But you’re implying that these folks understand macroeconomics and simply act like they don’t, just to appeal to the prejudices of their base. No, they’re probably just as willfully ignorant on the subject as the people who elected them.

  • AnonymousSam

    As long as the older generation is or has been engaged in activity which benefits the younger generation, then yes, the younger generation is expected to reciprocate. There are worse words than “ingrate” for a person who milks the previous generation for all they’re worth and then leaves them in a gutter. Society is built upon mutual cooperation; why should this suddenly be invalid across generations?

  • http://profiles.google.com/marc.k.mielke Marc Mielke

    There are worse words than “ingrate” for a person who milks the previous generation for all they’re worth and then leaves them in a gutter.

    I didn’t know ‘Paul Ryan’ was a pejorative. (But it totally should be).

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    It could be argued that with the current state of affairs – technogadgets notwithstanding – that the baby boomers have been milking the GenX and GenY efforts for quite a while, in particular by endorsing policies that have the effect of yanking away the ladder of upward economic mobility that they had access to.

  • P J Evans

     Most baby boomers aren’t going up that ladder either.

  • Miratri

     It’s not like younger generations will necessarily get out of the obligation if we gut social security, either. What happens to elderly people who can’t afford to live on their own? Traditionally, they wind up living with their children, if they have children who are able to help them. Guess what’s more of a financial squeeze than a 6.25% tax? Being the sole supporter for your parents for an unknown number of years, probably while working at least one job and perhaps raising children. AWESOME.

    Sure, a few whose parents are wealthy and well prepared for their own retirements will be fine, but life’s just going to get even harder for everyone else in the “sandwich generations,” in terms of finances and actual physical and emotional labor, if their parents wind up totally destitute.

  • Carstonio

    Single-payer health care is based on the same argument. In both cases, we’re talking about unavoidable costs. The absence of single-payer means that folks without insurance rely on emergency rooms for primary care, which translates to higher health care costs for everyone. Similarly, without the cushion of Social Security, the cost of supporting the elderly gets tossed back to their loved ones.

    Unavoidable, that is, unless society simply chooses indifference. Other than Charles Dickens villains, I haven’t heard anyone explicitly advocate letting the poor and elderly starve. In my experience, opponents of the safety net refuse to accept that the world isn’t inherently just and cling to the comforting notion that poverty is solely the lack of ability or drive. Or else they believe that people would willingly share everything that distressed neighbors would need if it weren’t for the big mean government making them share. Not necessarily a selfish objection to sharing, but more of a childish objection to sharing as a social obligation.

  • P J Evans

    I read an argument once that the Constitution was signed by all of us, because everyone was represented by the signers, even people who weren’t born.
    It’s interesting when you realize that they effectively institutionalized revolutions: every four years, we get a government-mandated opportunity to change things.

  • Baby_Raptor

    I didn’t consent to let those people speak for me. And my relatives were in Italy at the time. My family didn’t get to America until…I want to say the 1940s? My grandfather’s parents, so we haven’t been here long. 

    So, hey. I guess this means I’m not bound by the Constitution!

  • prufrock

    Any time someone brings up the tired chestnut that there were twelve workers per retiree in 1940 but now there are only three (or two and a half, or whatever number is thrown out there), I smile and think of the year 1912.  That was the last year that there were as many rural residents as urban dwellers.  That number has shrunk to the extent that today only about three percent of the population is even tangentially connected to food production.  Yet somehow we have not suffered from mass starvation at any time in the past one hundred years.  In fact, we produce far more food than was even conceivable in 1912.

    The modern economy acts in much the same manner.  Today’s worker is far more productive (at least when they aren’t commenting on Slacktivist).  We have more money as a nation than we’ve ever had, and the only reason so many are feeling the pinch is that so much of that excess has been absorbed by the one percent.  To complete the farm analogy, picture a tiny portion of the population living in mansions built on top of giant silos, where all that excess grain is stored.

  • Daughter

    We’re not productive when we’re commenting on Slacktivist? Surely not!

  • Robyrt

    Only if you have a very strict definition of “broke” which means “there is no money available for this purpose.” People who say Social Security is going broke mean “there is not enough money available for this purpose,” in the same way I might say that I am broke because I’m not earning enough to cover my rent and utilities. So yes, Social Security is going broke, in the sense that long-term it will need additional revenue to cover its expenses.

    However, I am not really concerned about Social Security, because its expected shortfall is relatively small and there is lots of room to raise additional revenue. The cap on payroll taxes could be raised, the system could be means-tested, the retirement age could be raised, the inflation index could be changed – any of these would be enough to keep the system functioning properly for the foreseeable future. It’s Medicare that’s the real problem.

  • P J Evans

     ‘Means testing’ SS would turn it into something like welfare – and that would make it much easier to kill.
    Raising the retirement age is equivalent to cutting SS. (Note that the people proposing this all have desk jobs, a really good health-insurance plan, a generous  pension in addition to SS, and lots ofmoney.)  Lowering the age for full SS would mean more people retire who want to, and that should mean more jobs for younger people.
    Changing the COLA methods also being floated – and it’s ANOTHER way to lower SS, because it would assume that people will choose less-expensive alternatives, ignoring that they’re already doing that, and still don’t make enough.

    Fixing Medicare so it doesn’t depend so much on insurance and drug company pricing would do a lot more to reduce the deficit. But they’ll never mention that, because Big Business.

  • Carstonio

    It would be so much simpler to lift the annual limit on FICA contributions so that the wealthy pay more. Ridiculous that someone whose annual income is in the billions would only have to pay $110,000 in these taxes  – it wouldn’t be worth the person’s time to bend down to pick up that amount from the sidewalk. The political realities are another matter.

  • P J Evans

     The current income cap is about $113,000. That means that people only pay FICA on the first $113,000 of income, not that that’s the maximum. (Although at its (roughly) 6% tax rate, they could, with a large enough income, actually pay that much.)

  • EllieMurasaki

    No, six percent of 113K is only 7K. If the cap were removed, someone would have to make 1883K before tax to pay 113K in this six-percent tax.

  • P J Evans

     I think that was what I was saying.

  • Carstonio

     Thanks. That still equates to the very wealthy paying less than a reasonable share. In fact, I would make the calculation work the other way, where one pays FICA only if one’s income is greater than $35,000 or so.

  • EllieMurasaki

    SOCIALISM!!11!

  • Carstonio

     Silly me, favoring progressive taxation when it would mean the collapse of free enterprise. I shouldn’t have believed all those economists and textbooks that define socialism as government ownership of the means of production.

  • EllieMurasaki

    But you *can’t* tax the rich a higher percent of their income than the poor! That would–that–something *horrible* would happen!

  • http://blog.trenchcoatsoft.com Ross

     The cap on contributions is not really the problem — the system needs to take in enough money from each contributor to cover all the beneficiaries. Assuming those numbers grow at comparable rates (which they more or less have to over long periods of time, or else you have some kind of social collapse and social security’s solvency is the least of your problems).

    The problem is that there are people out there making so much more than the average person that a sizeable chunk of “all the money” is tied up in their above-the-cap salaries.

  • http://lliira.dreamwidth.org/ Lliira

    And they’re keeping everyone else’s salaries down as well.

  • Carstonio

    The problem is that there are people out there making so much more than the average person that a sizeable chunk of “all the money” is tied up in their above-the-cap salaries.

    Why wouldn’t that problem be alleviated somewhat by lifting the cap? I’m not sure why the problem you describe is separate from the cap. I would think the best way is to have everyone pay a certain percentage of their income in FICA.

  • WalterC

    Pretty much, yeah. It’s not like the FICA tax or, indeed, any aspect of the Social Security system is set in stone or somehow unalterable in any possible way. Nominally the revenue from the FICA tax is separate from overall government revenues but that’s really not true (or possible) under the standard rules of government accounting anyway; there is no particular reason why the Social Security program and its associated taxes cannot be handled through the general appropriations process. 

    Well, there are reasons but all of them are political. We must still grapple with them but there’s no reason to act as if they are set in stone.

  • P J Evans

     It’s a trust fund. They use it to balance (or these days to unbalance) the budget, even though it isn’t a budget item.

  • ohiolibrarian

    I can’t help feeling that, as a member of the Baby Boom generation, we are not fulfilling our part of the inter-generational bargain that culminates in Social Security. The last couple of younger generations haven’t gotten enough of the stuff we should have been buying–like infrastructure and education–to help them in the future. Keeping in mind that helping them also helps us.

  • Carstonio

     Good point. It helps to think of government as a giant membership corporation, or a mutual, where members pool their resources and their shared responsibilities and receive certain benefits.

  • Loki100

    Yeah. The Baby Boomers were incredibly selfish assholes. I blame some combination of the Cold War and being born after the hardships of the Depression and WWII. Generation X more or less checked out of the building the moment they were born. The only bright light is that the Millennials, growing up with the War on Terror, the internet, and the great recession, seems to be a generation of selfless (if self-righteous) do-gooders.

    I really hope that trend allows them to over take the Baby Boomers and what remains of the Silent Generation.

  • http://lliira.dreamwidth.org/ Lliira

    Generation X puts in more volunteer hours than any other generation since people started keeping track. It’s been true since I was a teenager and it’s still true today. The myth that we “checked out of the building” is just that: a myth. We didn’t take to the streets in huge masses over a war because there was no draft, and because there weren’t nearly as many of us as there were of Baby Boomers, and for that we get pilloried as not caring. But it is bullshit.

    Also, you think growing up in the War on Terror is bad? Try growing up during the Cold War.

  • Lori

     

    We didn’t take to the streets in huge masses over a war because there
    was no draft, and because there weren’t nearly as many of us as there
    were of Baby Boomers, and for that we get pilloried as not caring. But
    it is bullshit.  

    This. We didn’t protest a war/draft that effected us (because there wasn’t one). We protested apartheid, which didn’t effect us directly. And we’re the selfish ones.

    I’m thoroughly over hearing about how the Boomers Ended The War and we’re a bunch of do-nothings. Because they only sort of did and we definitely aren’t.

  • Carstonio

    As a member of Generation X, my theory is that too many of my cohorts
    had their politics defined early by the Iran hostage crisis. They
    learned to falsely equate the Carter approach to foreign policy as
    timidness and weakness, favoring instead the US acting as the world
    bully.

    And the Boomers still seem bitterly divided over the 1960s after all this time. Some have remained do-gooders and some have remained Archie Bunker Jrs.

  • Turcano

    According to the Strauss-Howe generational theory, Generation X is a Nomad generation, whose defining characteristics include coming of age during a period of social decline and largely being the children of a Prophet generation (in this case, the Boomers), who as a general rule are really lousy parents.

  • Carstonio

    What period does the theory define as social decline? I hear right-wingers use that term to bash the reforms of the 1960s.

  • Turcano

    No, this would be during the 1980s, specifically the Culture Wars.

  • Carstonio

    How would the culture wars fit the definition of social decline? Those were groups with privilege based in personal characteristics fighting against attempts to reduce that privilege. Unless the folks using that definition are on the side of those groups. One can make a case for social decline in the 1980s, but based on the increasing gap between rich and poor and the rise in homelessness and gang violence.

  • Turcano

    In the parlance of the authors, this period is considered to be an Unraveling, where the major social institutions have been discredited by the previous generation and the social demand for order is at its nadir.  The Culture Wars were the reaction to this turn of events by (largely right-wing) Boomers.  I think it serves simply as a label for this time period, since the authors don’t appear to have a political agenda.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    In the parlance of the authors, this period is considered to be an
    Unraveling, where the major social institutions have been discredited by
    the previous generation and the social demand for order is at its
    nadir.

    Do you have a reference to a book or anything I could read? This intrigues me. :)

  • Turcano

     The book is called Generations by Strauss and Howe; an introduction to the theory can be found here.

  • http://www.facebook.com/jon.maki Jon Maki

    In addition to what Lliira said, it’s worth pointing out that our host is himself (like many of us here) a member of Generation X.  I’m curious as to what this place would be like if he hadn’t “checked out of the building.”

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    *Cough*

    Born in the 1970s here and not checked-out :P

  • http://flickr.com/photos/sedary_raymaker/ Naked Bunny with a Whip

    I, for one, welcome our new infant overlords.

  • stardreamer42

    I thought you were trying to lift yourself above that, but perhaps, I’m wrong

    More ad hominems. Bravo.

    FREE SPACE

    I suppose you don’t really like any sort of freedom unless it suits your agenda, do you?

    Now, however, I have learned from experience that the comment section of
    this blog is much less of a place for intelligent discourse than it is a
    place for propagandist positions and trolling.

    Bingo!

  • http://rightcrafttool.blogspot.com/ Sign Ahead

    Thanks, stardreamer42. I’m gonna be laughing about that for days.

  • Morilore

    As a “Millenial,” I’m not sure I believe all this “X demographic cohort is A personality characteristics, Y demographic cohort is B personality characteristics” stuff.  I mean, I’m sure there is some truth to it, but weren’t “Boomers” radical and revolutionary when they were our age?  

  • Lori

     

    “Boomers” radical and revolutionary when they were our age?  

    Some of them were. Some of them were proud to be Okies From Muskogee*, and most of them just went to school and got jobs and got married and had kids, with some of them getting the dreaded all-expense paid trip to SE Asia along the way.

    Honestly, what Boomers mostly were was incredibly numerous. Only a certain percentage of them were radical and revolutionary, but there were so many of them in absolute numbers that they made a huge amount of waves and the whole generation got credit or blame, depending on your POV, for the actions of some (not a majority).

    *http://www.youtube.com/watch?v=3UZUJQ5i8gk

  • Katie

    As are host has pointed out, the biggest problem that Gen X has is that there just aren’t that many of us.  All of the allegedly revolutionary attitudes and behaviors in Generation Y are present in Generation X, which makes sense when you consider that Gen X and Gen Y are both largely made up of the children of Baby Boomers.  The difference is that Gen X was small enough to ignore, allowing the Boomers to dominate politics and culture for for another decade or so.

  • http://www.nicolejleboeuf.com/index.php Nicole J. LeBoeuf-Little

    It seems like this is another problem that comes down to unemployment.

    Reduce unemployment, you increase the people receiving paychecks and therefore paying into the Social Security system.

    This is related to a couple of things noted above, the bit about lowering SS payout age = more people retiring when they want = freeing up more jobs, and the bit about how the problem is how much money is tied up in fewer people with above-the-cap paychecks. And the bit about how immigration (documented or otherwise) is actually helping, not hurting, because it’s more people employed in and therefore paying into the system.

    Making more jobs and employing more people! What can’t it help?

  • EllieMurasaki

    If they’re illegal, they have no number to identify them to the IRS and are therefore not paying any tax except sales. Or so I understand.

  • P J Evans

     Actually, they have numbers that don’t belong to them, so they pay in, but can’t collect later.

  • Daughter

     Not necessarily. Undocumented immigrants can qualify for an ITIN (individual tax identification number) in order to increase the work options, and the IRS will not share that information with other agencies. And once they’re in the system, they’ll pay payroll taxes and perhaps income taxes.

  • Daughter
  • EllieMurasaki

    *nods*

  • Derekl1963

    I’d suggest you actually research Social Security – because neither you, nor  Dan Crawford or John Harvey has a clue what they’re talking about.  Yes, we have a surplus, no we won’t have it forever – because over the next few decades more money will be taken out to pay retirees than will be coming in from existing workers.  The problem however is that there’s not much money in the trust fund – it’s mostly a stack of IOU’s from the Treasury.  If Congress doesn’t redeem those IOU’s on schedule, the fund goes broke.  If Congress does redeem them, the fund goes broke a little later than otherwise because people are living longer post retirement than planned on, and because the worker/retiree balance is going to be out of whack for decades as various demographic bumps work their way through the system.

    The only way to avoid the fund going broke is to either raise the social security tax (considerably), or to cut the benefits being paid out (equally considerably).  Neither is politically palatable, so *both* parties are trying to find ways to avoid dealing with the reality of the need to start paying back those IOU’s and the need to start thinking hard about what will happen in the 2020’s and beyond.

  • EllieMurasaki

    You know, I’m still not clear on why a coin with “$1 TRILLION” stamped on it getting minted, deposited in the Treasury, and put on display in the Smithsonian is an invalid means of being rid of the debt, including what the Treasury owes the SS trust fund.

  • P J Evans

    The only way to avoid the fund going broke is to either raise the social
    security tax (considerably), or to cut the benefits being paid out
    (equally considerably).

    Nope. That’s wrong. So is your statement that it’s a stack of IOUs.
    It’s a TRUST FUND and it’s invested in 3% T-bills.

    Now, how many other talking points have you collected from the deficit hawks that want to give money to corporations and the rich, and take it from everyone else?

  • http://blog.trenchcoatsoft.com Ross

     And, just to reiterate, if the US government can not redeem T-Bills, we al have far worse problems than Social Security insolvency.

    The “But it’s government IOUs and they might not have the money to pay them back!” argument is exactly as valid as “But a meteor the size of texas could hit the earth in 2037 causing a mass extinction on par with the K-T event, and how will the government pay out social security then?”.  Yes. It could happen. But the scenario in which it happens is the total collapse of our society. Social security isn’t the problem.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    You do know Social Security IOUs are like writing on a piece of paper that you took 25 cents from your left pocket and put it in your right pocket so you owe yourself 25 cents.

    Think for a second how absurd it sounds on a personal level and you’ll see why the IOUs effectively artificially raise the national debt.

  • Albanaeon

     Fiat currency.  Learn it.  We have the money we say we have.  It really is that simple.  There’s no way we can “run out of money” because its a great imaginary way to define the priorities of a government, and it can imagine as much as it needs to accomplish that.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    GUYS

    FOR THE LAST FRAKKING TIME

    FLOWS NOT POOLS

    So stop with the “Ponzi/pyramid scheme” thing mmkay

    This sort of ridiculous crap is why I wish governments would explicitly use the cash basis of accounting; they depend on a flow, not a pool.

  • Daughter

    I’ll speak up as another Gen-Xer. I’m currently reading Steven Pinker’s The Better Angels of Our Natures, which explores the  causes of violence in human societies  throughout history, as well as the factors that lead to increases or decreases in violence.

    He notes that certain aspects of violence are common across time and cultures. For example, in all cultures and time periods, the vast majority of violent offenders are men, and the preponderance of violent acts are committed by young men in their 20’s.

    What does this have to do with the topic of Gen-X? Well, I’ll just note that violence declined precipitously in the U.S. starting in the 1990’s – just as the young men of Generation X were reaching their 20’s. And that decline was per capita as well as in absolute numbers, so it wasn’t simply a factor of Gen X’s fewer numbers.

    The young men of my generation bucked the trend.

  • Daughter

    (hoping there is no italic issue)

    If anyone has read the book, let me clarify: the trend has been toward decreasing violence around the world for several centuries now, due to factors such as more effective governments, the growth of commerce, cosmopolitanism, and the increasing power of women.

    So the trend Gen X bucked wasn’t a decrease in violence – that was already happening. It was a decrease in violence specifically among young men.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    “You know, I’m still not clear on why a coin with “$1 TRILLION” stamped on it getting minted, deposited in the Treasury, and put on display in the Smithsonian is an invalid means of being rid of the debt, including what the Treasury owes the SS trust fund.”

    you don’t think that concept is at all ridiculous and contrived just on it’s face? I mean, as opposed to the conventional way of paying back debt. 

     it’s a Wall Street type gimmick. You pay debts by paying them back not pulling a rabbit out of a hat.

  • EllieMurasaki

    The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; […] To borrow Money on the credit of the United States; […] To coin Money, regulate the Value thereof, […]

    I’m sure we’d all rather the debts got paid with the taxes collected, but collecting enough taxes to pay the debts is not politically possible with your party insisting that raising taxes on the people who can pay higher taxes (without cutting important things like food and rent) is a no-go. Coining money is also within the government’s power, and that’s another way to get hold of enough money to pay the debts.

  • Lori

     

    you don’t think that concept is at all ridiculous and contrived just
    on it’s face? I mean, as opposed to the conventional way of paying back
    debt.
     

    No. Because unlike some people I bothered to learn why the $ttillion coin was being considered. I understand Obama’s reasoning for not doing it, but I consider the idea ridiculous. Contrived, yes, but since it was in response to an incredibly contrived crisis that seemed rather fitting to me.

     

     it’s a Wall Street type gimmick. You pay debts by paying them back not pulling a rabbit out of a hat.   

    A) The coin was not intended to pay back debt. 

    B) You still don’t understand how government debt works.

  • Kubricks_Rube

    you don’t think that concept is at all ridiculous and contrived just on it’s face?

    I think the problem the coin would address- hitting the debt limit- is ridiculous and contrived on its face. And like Paul Krugman said, the $1 trillion coin would be a silly but benign way of solving that problem while the GOP solutions would be just as silly but not at all benign.

  • http://twitter.com/shay_guy Shay Guy

    It’s irrelevant. The idea behind the $1T coin was circumventing the debt CEILING, not paying off the debt. Since the coin would’ve been useless for anything but trading between the Fed and the government, the Federal Reserve would’ve expected the government to eventually buy it back, presumably in exchange for $1T in bonds — and then it’d just be a matter of normal government debt. In the meantime, the Fed would’ve sold some of their other assets as usual, just as if the coin were a giant bond. (A zero-interest bond, but these days that’s not far off from the reality.)

    Effectively, then, the coin would’ve been an IOU for IOUs.

    You want to know the actual plan for dealing with the debt? Simple.

    Step 1: Get the economy running at full capacity and full employment.
    Step 2: Balance the budget. Do not skip step 1 before this one.
    Step 3: Outgrow the debt like we did after WWII. This takes long-term planning, but it’s doable in principle. Double the GDP under a balanced budget and the debt won’t be worth worrying about.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Corporations issue “new money” all the time.

    Whenever a corporation creates new shares to sell to the public, and people believe the shares will improve in value, they purchase said shares.

    Nobody thinks that spells doom and gloom, it’s just called “diluting the stock” because the ownership of the company gets spread across more people. But it can be a way for the company to get magic extra money to do things like pay off debt. :P

  • P J Evans

     It’s to pay the bills Congress already racked up. We have the money, but Congress doesn’t want to pay its bills.

  • mud man

    The purpose of the SS Trust Fund is to provide a pool of money that the Operating Government can borrow from without increasing the National Debt. (And incidentally to stabilize payments vs. receipts, if it hasn’t all been loaned out already.)

  • http://twitter.com/lesterhalfjr Chris Hadrick

    “Effectively, then, the coin would’ve been an IOU for IOUs.” nothing late stage empire about that thinking.  Sorry I mushed up the coin with debt/ debt ceiling. My point was about the ludichrisness of the whole thing. 

    PJ – don’t rack up the bills then. Why are we facilitating this with gameage? 

  • EllieMurasaki

    Yes, the debt ceiling fight absolutely is ludicrous. Do you suggest we abolish the debt ceiling entirely, so we don’t have to have that fight again?

  • Lori

     

    PJ – don’t rack up the bills then.

    The bills have already been racked up. The debt ceiling is about money Congress has already spent, not money they may or may not spend in the future. No one who gets their news from Right wing sources seems to be able to grasp this. I wonder why?

    Why are we facilitating this with gameage?    

    What we’re trying to facilitate is having a functioning country. The only “gameage” is on the part of wingers and glibertarians.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    The solution to excessive debt is not to have excessive spending. raising the debt ceiling and minting  trillion dollar coins do not address the source of the problem at all. 

    To say “we already spent the money, it’s too late” is not dealing with the core issue either.  stopping the cycle AT ANY POINT is the only proper course of action.

  • EllieMurasaki

    Suppose we stop all government spending tomorrow. Cold turkey. (And suppose the economy doesn’t crash from the sudden lack of spending by people employed by the government or by people getting money from same.)

    The money we’re worried about now is already spent. The debt ceiling fight is about being able to pay for what we bought. To use the (admittedly flawed) household budget analogy: you are suggesting that Uncle Sam cut up his credit card and never send in another payment, even though he’s carrying a substantial balance on that card.

  • http://blog.trenchcoatsoft.com Ross

     The source of the problem is to little money. It’s not too much spending. We have a BIG COMPLEX country that has BIG PROBLEMS that can only be addressed by LARGE EFFORTS.

    And the whole idea of a debt ceiling is ludicrous. If someone’s willing to loan us money, they should be allowed to. I mean, fuck, you’re a libertarian, why can’t you understand that? WOuld you advoctae a personal debt ceiling for individuals and make it illegal for private citizens to borrow more than some particular amount of money? No, I’m pretty sure you’d say “THose people who took out giant mortgages they can’t afford had every right to borrow as much as they could find someone to loan them.”

  • EllieMurasaki

    a personal debt ceiling for individuals

    Those are called ‘credit limits’.

  • Lori

      Those are called ‘credit limits’.   

    No. A credit limit is set by the lender. What Ross is talking about would be more like a lender deciding that she’s willing to loan you $1000 dollars because she’s confident that you’re good for it* and the government saying, “No. You may not loan Ellie $1000 even though you believe she’s good for it. You may only loan her $100 because we don’t think anyone should ever spend more than $100 over their current liquid assets.”

    *That’s your credit limit (more or less).

  • EllieMurasaki

    Oh, right. Sorry.

  • AnonaMiss

    Yeah, this is all before my time, so for the most part I defer to the opinions of those who lived it.

    I will say though that I am a big fan of the draft. Though of course the rich have ways of getting out of even the draft, it’s much more color/class blind than our current ‘volunteer’ military. Hell, the military contracting system is basically a way of paying privileged individuals more than twice as much to do the same jobs they pay unpriveleged individuals poverty-level wages for. While the Vietnam protesters didn’t have the benefit of hindsight, I think it’s pretty clear that reinstating the draft would at this point be an equalizing, rather than a privileging, force in the modern military.

    Of course even more than that I’d prefer a mandatory term of service model a la Norway, Switzerland, Israel. But this is all pipe dreams in the current political environment ofc.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    The thing that makes me shy of the mandatory term of service thing is that I’ve seen some rich folks propound it as a social remedy when in this day and age the chances are good they’d find all kinds of get-out clauses for their own kids to avoid it.

  • AnonymousSam

    One can also argue that the draft makes unpopular wars more appealing because there’s a near-guarantee of soldiers to fight in them.

  • EllieMurasaki

    More appealing to the people who wouldn’t be getting shot at.

  • AnonymousSam

    I.E., the people who have the power to declare war.

  • Lori

     

    One can also argue that the draft makes unpopular wars more appealing
    because there’s a near-guarantee of soldiers to fight in them. 

    I think a better argument can be made for the opposite position. More people would push back against politicians lying us into wars if they knew there was a possibility that they and theirs could be forced to fight them. I think people would have been a lot less likely to swallow the obvious
    lies used to justify the invasion of Iraq if they thought
    they might be the ones rolling into Baghdad or taking
    a trip to sunny Fallujah.

    We’ve come to a weird place in this country WRT civil-military relations. On one hand it’s more or less mandatory to venerate The Troops. On the other hand it’s perfectly fine to treat soldiers as disposable, in no small part because they volunteered and they knew the job was dangerous when they took it. Even further, it’s fine to treat the people who fight our wars as completely invisible, beyond the reach of either scrutiny or support, if they work for a private contractor rather than being directly employed by the Pentagon.

  • Sgt. Pepper’s Bleeding Heart

    Yeah, I think equity is a very important thing to strive for, but not to the extent of forcing people to go kill people in whatever country is your enemy this year.

  • AnonaMiss

     

    Yeah, I think equity is a very important thing to strive for, but not to
    the extent of forcing people to go kill people in whatever country is
    your enemy this year.

    I agree; but I also think that frivolous wars would be significantly less politically viable if those being sent to fight came from all sorts of backgrounds, not only those accustomed enough to being fucked to just bend over a little further.

    The fact that there hasn’t been a strong anti-war movement since the Vietnam war is IMHO due to the absence of a draft. It’s the military equivalent of Missing White Girl Syndrome.

    Invisible Neutrino’s point on the rich just getting their kids out of it is well-taken, but I don’t think it would survive more than a generation or two. When the grand majority of voters have done their service, accusations of draft dodging would be much more severe than GWB experienced.

    The main flaw I see with mandatory terms of service is the problem of what to do with strong pacifists. Which I don’t have an answer for.

  • P J Evans

     They could do work that benefits the country, even if they aren’t in the military. (There aren’t that many strong pacifists. There are a lot of people who will do whatever they can to avoid being drafted, including faking disability.)

  • Lori

    accusations of draft dodging would be much more severe than GWB experienced. 

    That wouldn’t take much. GWB was IMO (one shared by many others) far worse than a draft dodger* and was a deserter and it didn’t keep him from becoming president and Commander in Chief of the armed forces. That would be the same armed forces he bailed on when even serving in his safe, cushy, draft avoiding berth became inconvenient to him.

    *Draft dodgers at least had the courage of their convictions and sacrificed for them. GWB was just a spoiled coward with connections.
    IOW, don’t underestimate the willingness of the privileged class to protect and support its own.

  • Sgt. Pepper’s Bleeding Heart

    The fact that there hasn’t been a strong anti-war movement since the Vietnam war is IMHO due to the absence of a draft. It’s the military equivalent of Missing White Girl Syndrome.

    Maybe not in the US. You may have missed the movement against the invasion of Iraq that culminated in millions of people across the globe marching in protest on a single day, and a number of US allies refusing to send troops to Bush’s slaughterathon.

    The main flaw I see with mandatory terms of service is the problem of what to do with strong pacifists. Which I don’t have an answer for.

    Strong pacifists are easy to deal with. Just chuck us in jail as always. Your bigger problem is what to do with ordinary people in the middle who have no beef with whoever it is your government is going to hate next week, don’t have a strong enough conviction to sit in jail over it, but could do without the future PTSD thanks very much.

  • AnonaMiss

    Maybe not in the US. You may have missed the movement against the invasion of Iraq that culminated in millions of people across the globe marching in protest on a single day, and a number of US allies refusing to send troops to Bush’s slaughterathon.

    Yes, I was specifically speaking of American reactions, since it’s specifically American reactions I’d hope would change given a mandatory term of military service.

    Anyway, I’m not sure why you think mandatory terms of service would increase the appetite for war. It doesn’t seem to have in Norway or Turkey (examples chosen because I have friends from those countries).

    An argument could be made that Norway had a less violent culture to begin with (though my Norwegian friend would take false offense and start talking about raiding monasteries if you let him hear that argument!), or that the global power differential would cause the US to behave differently from the multiple countries, including socialist democracies, that already have mandatory terms of service. But I’ve already articulated why I don’t believe that to be the case: When everyone you care about is required to spend a couple years in the military, it’s a lot easier to remember and identify with the human cost of war.

    Also, wrt strong pacifists, please don’t assume the worst of me. I brought up the question of what to do about them because I would like to respect their beliefs – but giving an option for community service instead of military service would negate or at least severely dilute one of the main benefits of the mandatory military service that one of my Turkish friends pointed out, which is that you end up thrown into an environment where you need to cooperate with people from regions & cultures in your own country that you aren’t familiar with, and form trust with them, even when (even though) you have wildly different outlooks. The friend who told me this is an atheist hipster from Istanbul, so I suspect the cultural barriers his mandatory term of service helped him cross were comparable to the ones you’d find in the US. Giving a group which is already hated by certain segments of the country a way to avoid the hard knocks could easily backfire. You’d have to really load a CO down with community service for people to believe it was really a moral objection, not just cowardice – maybe a double or triple term.

  • http://baloneyslicer.tripod.com/ Robert Cogan

    Social Security benefits lift about 21.4 million Americans out of poverty. It can be made solvent for nearly 75 years by taking the cap off salary contributions. So when I hear Obama mentioning reducing benefits, he angers me. We need a broad coalition to make sure this doesn’t happen. Surely conservatives can attack that “spending” at some time when millions are not still in debt and unemployment is high. Simply eliminating the cap on contributions would only affect about 6% of covered earners (see, online “The Evolution of the Social Security Tax Max” and “Distributional Effects of Raising the Social Security Tax Max.”) This would be a tax transfer from very high income recipients in a given year to poor recipients. 
       
    Mainstream American policy has treated the Constitution as not restricted to its words but granting implied powers. Government must tax to function and those able must, morally, render unto Caesar, not evade taxes. Our paper money is actually property of the Federal Reserve. Our government morally earn its keep (taxes) by providing for common defense and the general welfare, including minimal relief of the poor. It’s ridiculous to think there is a natural “shortage” of paper U.S. dollars and (electronically created / transferred / eliminated) credit so that “We’re broke.” Our national debt, unlike personal debt, is no “Weapon of Mass Destruction.” The Constitution gives Congress the authority to create [any amount of] money and “regulate the value thereof,” even “United States Notes” (greenbacks, created without borrowing from the Federal Reserve, without taking any debt.) Instead, our money – corrupted Congress gave the money power (1913) over to a Federal Reserve which is controlled by bankers of the private profit making banking industry.

    Greenbacks became worthless to Colonial individuals, but by funding our Revolutionary army, they “bought” independence for the whole country from Britain. Civil War greenbacks bought freedom from slavery, preserved the Union, and returned to purchasing power parity with gold backed dollars by 1879. They could be created in controlled amounts, targeted to re-flate employment, infrastructure, and public funding of healthcare and highert education debt reduction. Out of control “hyperinflation” is a private banker propaganda – created taboo.

    A few billionaires (Pete Peterson, the Koch brothers) pay Big Liars (e.g., Beck, Limbaugh) and public serpents (CongressCreeps) to act as if there was a “Virtue of Selfishness” (Ayn Rand book title.) Their bottom feeding, prehensile avarice, disguised under “freedom” rhetoric, seeks endlessly to vacuum and siphon up income from poorer citizens and reduce the amount of governmental transfer back to the smallest trickle. Forty other billionaires, including Warren Buffet and Bill Gates, have some noblesse oblige, and have promised to give half their fortunes to charities (of their choice.) But systematic, noncapricious governmental relief transfers from high income recipients to the aged and poor are life saving, morally justified, ancient, widespread, and time – honored by unselfish people.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie- then it’s just a shell game. You spend tons of money then you go “well we have to raise the debt ceiling or it will be ever so horrible” and nothing ever changes. 

    Knowing the debt ceiling can be raised at will takes away any of a debt ceilings purpose. it’s a ceiling. you aren’t supposed to be able to raise it all the time.  

    Also, would you have a problem with Caligula being on a hypothetical trillion dollar coin?

    Ross- “WOuld you advoctae a personal debt ceiling for individuals and make it illegal for private citizens to borrow more than some particular amount of money”

    not the same thing. the person is only harming themselves if they borrow more than they can pay back. The government is harming us. We have to pay this back, it’s our money. 

    NO our government (not “us”) shouldn’t  just borrow money and spend it on random stuff because it can. for the same obvious reasons a person shouldn’t. 

    Robert Cogan- “Out of control “hyperinflation” is a private banker propaganda – created taboo.”

    Yeah Weimar Germany and current day Zimbabwe were / are just holograms created by “private bankers” 

    I agree that 1913 was a fateful year and the Federal Reserve is an immoral institution but it’s  because it’s  a central bank by other name, not because it’s “private” which is certainly isn’t.  http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets

  • http://blog.trenchcoatsoft.com Ross

     

    not the same thing. the person is only harming themselves if they
    borrow more than they can pay back. The government is harming us. We
    have to pay this back, it’s our money. 

    NO our government (not “us”) shouldn’t  just borrow money and spend
    it on random stuff because it can. for the same obvious reasons a person
    shouldn’t.

    I consent to my country taking on this debt. I think that this debt is worth it. So do a majority of americans.

    You don’t get to destroy civilization because Chris Fucking Hadrick is a selfish, greedy bastard who would rather watch the world burn than to pay a dime of the money that only exists at all because of the government he wants to cripple.

  • EllieMurasaki

    So you really are suggesting that the US cut up its credit card and stop paying the lender. Cutting up the credit card might be a reasonable approach if it were possible to, y’know, keep paying federal employees something they can use to pay their rent and food bill, but we’d have to raise taxes staggeringly to manage that. Not paying the people who lent us the money we already spent? Saying we refuse to pay our debts? There’s reasons moral obligations are often stated in terms of debts and vice versa. I don’t agree with a lot of those reasons, but I do agree with some and most people agree with most all of them and I’m shocked that you seem to agree with none.

    Caligula has no significant role in US history. Were the coin to be minted, I’d put Harriet Tubman on it. Or Sally Ride. Or Janet McCloud. Or, hell, Michelle Obama.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    We have 16 trillion dollars  in debt now and I’M the one who wants to destroy the country because I don’t want MORE? study Rome for 3 seconds sometime.

     money that only exists at all ” ??   I don’t think you quite understand the concept of money.

  • http://www.facebook.com/people/Patrick-McGraw/100001988854074 Patrick McGraw

    I’m sometimes confused and frustrated by the generation classifications. My high school sociology textbook listed birth dates for the Baby Boom as 1945-1968, a range which would have included Kurt Cobain, one of pop culture’s poster children for Generation X.

    And due to being born in 1979, I am supposedly Gen X. Even though none of the generational markers for Gen X apply to my experience, and most of those for Gen Y do.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie- It’s a totally symbolic meaningless coin. why not Caligula? It’s a general nod to similar moments in Western Civilization. 

    re: the draft: the argument for it is that it will reduce the number of wars. I have an idea: how about we don’t declare more wars??  How about no draft AND no wars? Whose country is this? 

  • Lori

    God, you’re an idiot.

  • Gotchaye

    This is absurd.  It is obviously much more similar to each of the hundred or so times the debt ceiling has previously needed to be raised than to the financial crisis under Caligula.  The whole point of minting the coin would have been to /avoid/ the sort of financial crisis that can be triggered by a government running out of money.  Typically we don’t put people on coins in order to make clear that we’re trying to avoid doing what they did.

    Also, a note on hyperinflation in Weimar Germany and Zimbabwe: in neither case was hyperinflation meaningfully caused by governments printing money to cover debts denominated in their own currency.  This is hardly obscure information; even Wikipedia is pretty clear on this.  After WW1 Germany was forced to take on debt in gold or in foreign currency to make reparations to the victors.  This debt was not sustainable, and Germany /could not/ pay it, nor could Germany devalue it.  But the alternative was to be invaded.  So Germany’s choices were cripplingly high taxes, printing at an ever-faster rate, or war.  Printing lots and lots of money was a perfectly rational decision, given their situation, and was not the cause of their problems.

    “Hyperinflation in Zimbabwe began shortly after destruction of productive capacity in Zimbabwe’s civil war and confiscation of private farms” – the first sentence of the Wikipedia page.

    One almost suspects that this absolutely massive drop in productivity might have had something to do with Zimbabwe’s problems.  There was also an enormous corruption problem.  Long story short, the government simply had no credibility.  There’s actually a very similar case in US history – the Confederate dollar saw hyperinflation at the close of the Civil War, precisely because it was clear to everyone that the government backing the currency wasn’t credible.  But given this lack of credibility, printing lots and lots of money was really the government’s only choice if it wanted to stave off collapse for just a bit longer. The lesson from Zimbabwe for the US today is that it is extremely dangerous to give people reason to doubt the government’s money/debt.  Some experts believe that an important factor in a country’s credibility on monetary matters is whether or not it intentionally defaults on its debt for no apparent reason.

  • Sgt. Pepper’s Bleeding Heart

    re: the draft: the argument for it is that it will reduce the number of wars. I have an idea: how about we don’t declare more wars?? How about no draft AND no wars? Whose country is this?

    Stop the clocks people, I agree with Chris. I don’t buy that he’s a screw-you-I-got-mine libertarian out of pacifist motives, but I agree on this. Forcing people to train to become killing machines will not reduce war. Putting our dicks back in and resolving not to pull out the war card every 5 minutes might.

  • AnonymousSam

    The problem is that it’s a tautological solution: “To stop going to war so often, don’t go to war so often.” Technically the answer is 100% applicable, but the bigger question is why the United States feels the need to go to war every decade or so, and I think it has a big part to do with having a huge military with billions of dollars’ worth of toys. You can’t flex military might if you don’t have enough to swing.

    “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” – Abraham Maslow

  • Sgt. Pepper’s Bleeding Heart

    Sure, which is why that kind of response is a throwaway line in an internet forum but not what I’d say in a more expansive treatise on the topic.

    Less flippantly, the attitude that war is the best way to solve every problem is unlikely to be helped by forcing vast numbers of your citizens to prepare themselves to wage war. 

  • Carstonio

     

    the bigger question is why the United States feels the need to go to war every decade or so, and I think it has a big part to do with having a huge military with billions of dollars’ worth of toys.

    Both probably have the same root cause. Bullies are driven by fears and insecurities. They believe, perhaps on an subconscious level, that if they’re powerful enough or intimidating enough, the people they fear will leave them alone. The insecurities of the US involve racism specifically and xenophobia generally, and I think Susan Faludi has a point with her theory that the early wars with the Indians shaped much of the national psyche. (Gee, hard to imagine why the people already living here would object to being pushed off their land by force.)

    Since at least World War I, xenophobia has been a dominant theme in rightist politics here, but certainly not exclusive to the right. Most often this veers between military adventurism and the type of isolationism expressed by folks like Pat Buchanan. Democrats often acted like hawks on communism, but this usually seemed like an overreaction to red-baiting from the right. I still shake my head over how too many people of my generation wrongly remember the Iran hostage crisis. In their minds, Carter was a wimp and the Iranians thought they could push him around and get away with it.

  • Buck Eschaton

    It’s interesting that the military never runs out of money, but social security does.  It’s really interesting that no matter how much we’re in “debt” we can find money for wars, but not for social security. When it comes to military spending and wars it’s almost like the U.S. Federal Govt. can create money out of nothing.  It’s really funny that we always have enough money for wars and for bailing out of the banks. More than $14 trillion to the banks, but we just don’t have enough for social security or for actual American citizens.
    It’s almost like we’re on some kind of fiat currency for wars and bank bailouts and then when it comes to actual people the Fed Gov transitions over to the old gold standard and starts operating liking some bleeping household. It’s really interesting.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    gotchaye- the point is hyperinflation is a real thing. 

    “But given this lack of credibility, printing lots and lots of money was really the government’s only choice if it wanted to stave off collapse for just a bit longer.”

    ” The lesson from Zimbabwe for the US today is that it is extremely dangerous to give people reason to doubt the government’s money/debt.”

    Well I certainly agree with this but people aren’t doubting us because some of us are making attempts to prevent more debt, it’s the debt that’s causing the doubt.  They even look similar as words. 

    countries don’t judge us by our stagecraft and politics they judge us by our actions and our actions have been inability to maintain a budget year after year since the 70’s ( with a couple of projected surpluses in the late 90’s) and Alan Greenspan’s loose money policies at the Fed  since the 80’s.

    Buck- I agree.  

    sgt peppers- reinstituting the draft is another gimmicky idea based on the notion that we  can’t possibly have some obvious basic thing we obviously want and need so we need to create a  political obstacle.  not a good look

  • EllieMurasaki

    You’re seriously basing an argument on ‘debt’ and ‘doubt’ looking similar? In that case, I demand the recognition my right to beer arms. Not sure what beer arms are, but I certainly have a right to them.

  • Lori

    I have an idea how you can make some real money. Contact the schools you’ve attended and promise never, ever to identify yourself as an alumnus if they refund your tuition. You’ll have to have someone help you figure out how to phrase it so it doesn’t sound like outright blackmail, but there is no self-respecting institution of higher learning that wouldn’t take the deal if you just show them the stuff you routinely post in the internet.

  • Gotchaye

    Well, no, it’s not the debt itself that’s causing the doubt.  First, it’s not very clear who’s doing this doubting.  Certainly not people looking for a safe place to invest.  Short-term interest rates could not be lower.  Basically everyone agrees that more inflation would be a good thing right now until nominal interest rates have room to lift from zero.  Long-term interest rates are even very low.  Recently, the only times we’ve seen actual, real-world evidence that the markets were unhappy with the country’s fiscal situation have had to do with one of three things – either the markets started getting panicky because of a threatened default (debt ceiling), because of the prospect of short-term debt reduction (fiscal cliff), or because of loud fights in Congress (the stated reason for the ratings downgrade).  If there had been no debt ceiling, no fiscal cliff, and no Republicans in Congress screaming about the debt, who would be concerned right now? 

    To the extent that there is doubt (and as I said, it’s not actually clear that there is doubt outside of politicians who want to cut entitlements and people who listen to politicians who want to cut entitlements), that doubt is driven almost entirely by stagecraft and politics.  Real doubt – doubt backed by money – causes higher interest rates and higher inflation.  Where are these things?

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    countries don’t judge us by our stagecraft and politics they judge us by our actions

    Why yes. Yes, they do.

    In the 1980s, Ronald Reagan and George Bush Sr. had no problem bullying small nations into doing what they wanted – for example, invading Grenada on a relatively thin pretext, etc. All this, of course, in the name of fighting Communism or drugs.

    Even in the 1990s, the USA was well-known in certain circles for coercing Latin American and African  nations to adopt anti-drugs laws or risk being forbidden to hook into the international electronic fund transfer mechanisms like CHIPS or FEDWIRE.

    Since poorer nations can in some cases live or die on remittances, being blocked from easily transferring funds is a real hardship.

    And let’s not even get into all of Dubya’s adventurism.

    Your country’s actions in the last generation have been that of a self-satisfied smug bully. And that’s what the world judges your nation on.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie- I just randomly noticed the similarity. 

    I have to go to work but will address these fine points later. bottom line though: cut your losses, walk away from the casino, start rebuilding the honest way having learned the lesson that short cuts aren’t worth it. 

  • EllieMurasaki

    I have no idea what you’re responding to.

  • EllieMurasaki

    But I can address this:

    cut your losses, walk away from the casino

    Get rid of the stock market and any markets for derivatives such as mortgage bundles? That might work! Dunno how we’d pull it off given national political and world economic climates, but that might work!

  • Lori

    cut your losses, walk away from the casino, start rebuilding the honest
    way having learned the lesson that short cuts aren’t worth it.  

    Life is not a video game. You can’t just hit the reset button and try a different route next time. And you should be thankful every day for that because you wouldn’t last a month in the “rebuilding phase”. You have no idea what you’re wishing for.

    you’re right. we can just borrow forever and ever with no limits and
    there will never be any comeuppance. Also, housing prices will always go
    up.   

    What you lack in information and understanding, you make up in stubbornness. You have no idea what you’re talking about, but you absolutely believe that you do and by gum you’re gonna to keep repeating it over and over and over.

    You are ridiculous.

  • Gotchaye

    it would be horrible. I’m barely making ends meet now. If the price of gas goes up anymore forget about it.

    I said inflation.  Not “the price of gas goes up and everything else stays the same”.  If the price of everything goes up by 10%, go to your boss and ask for a raise.  Wages inflate too, at least when there’s some competition among firms for employees.  Wages don’t inflate when unemployment is too high (for that particular sort of job, and in the short-term), but for these industries inflation reduces unemployment, and the long-term impact of that is extremely positive for everyone.

    If you think that cutting interest rates is a reasonable response to an economic downturn, then you should be for inflation right now.  The problem we face is that we can’t cut interest rates – you can’t have a nominal interest rate lower than zero or else people will just hold on to their cash.  The only way to lower the real interest rate further is to add enough inflation to push up the associated nominal rate.  Your false consciousness about this is astounding; even the finance-dominated and inflation-averse Federal Reserve has decided – several years late, but still – to allow higher inflation, and has even expressed a commitment to higher inflation for some time after the recovery strengthens.

    you’re right. we can just borrow forever and ever with no limits and
    there will never be any comeuppance. Also, housing prices will always go
    up.

    I don’t see where I said this.  I said there was no indication that any serious person doubted the US’ ability or willingness to pay back its debt now, except to the extent that such doubt is caused by political games Republicans play.  Of course there are limits.  Those limits are the interest rate and inflation.  Absent intentional sabotage from inside our government or some massive productivity-destroying disaster on an unheard-of scale, there is no possibility of an overnight spike in inflation – this is the advantage of being able and willing to print money when necessary*.  You’re slapping an ice cream cone out of the hand of an anorexic person because they just can’t keep eating like that without getting fat.  I assume you don’t think that any non-zero debt-to-GDP ratio is bad.  So what level is appropriate now, and why that level?

    *Sudden, catastrophic inflation (or higher rates), which is the only sort which might worry us when inflation is low, is caused by a lack of faith in money, as I explained earlier.  This is only a danger if it is possible for the government to “run out” of money, either because it cannot print or because so much productivity is quickly lost such that real debt obligations can’t be met with the remaining resources.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    “If the price of everything goes up by 10%, go to your boss and ask for a raise. ” hahahahahaha

  • EllieMurasaki

    Or go to the government and ask for a minimum wage hike, at least enough to cover inflation, preferably enough that literally everybody with a single full-time job can afford to live off that paycheck. Coupled with incentive for merchants to not raise prices accordingly.

  • Gotchaye

    I can only assume this is amusing to you because you’re in an industry where your boss could easily find someone else to do your job for the same pay.

    Maintaining some permanent non-zero level of unemployment is probably the major reason why business interests want to keep spending and inflation low.  They don’t want very high unemployment, because then they have fewer customers, but a small amount of unemployment doesn’t eat into their revenues too much while also giving them an enormous amount of bargaining power in negotiations with their current employees.  Even if you have a union, they can always hire scabs.

    Inflation gives everyone a reason to spend more money faster.  It increases demand and lowers unemployment.  Government spending directly increases demand. There’s actually reason to think that government spending when unemployment is up is actually not inflationary at all, even if that’s something you’re worried about. Lower unemployment makes you more able to demand real wage increases, and makes it relatively easy to insist on cost of living adjustments.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    not how it works in the real world homey

  • Lori

     

    not how it works in the real world homey   

    Tell me that you did not type this with a straight face. You barely have a nodding acquaintance with the workings of the real world.

  • Buck Eschaton

    OMG Zimbabwe!!! The Govt. might invest in it’s people. OMG Weimar!!!  Giving literally tens of trillions of dollars to banks no inflation. Monstrous sums to the military no inflation. The same amounts to actual U.S. citizen human beings OMG Zimbabwe. Literally no ones worries that the banking industry creates 97% of the money supply, but OMG Zimbabwe!!! if the Fed Gov wants to direct/create just a measly sum to the 99%.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Anyone’s salary indexed to inflation?

    “Inflation gives everyone a reason to spend more money faster.”

    Yes, blind consumerism is the answer. It’s not exactly what got us into this mess or anything.

  • EllieMurasaki

    Supposedly we get cost of living increases at my job, which is effectively indexing our pay to inflation. We don’t in practice, since the raises have never been more than two percent recently and some years there haven’t been any at all, but we’re supposed to.

    Which is an improvement over a great many not-state-worker jobs. At least we do get that two percent some years.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Econ geekery: Did someone at your work ever use the words “partial de-indexation” when talking about modifying the old COLA formula? There’s probably some technical wording about adding only that part of the increase in the inflation rate above a certain threshold.

    This trickery was actually used by the Canadian government to avoid needing to provide full cost increases to pensions as well as allowing bracket creep during the low-inflation 1990s.

  • EllieMurasaki

    Econ geekery: Did someone at your work ever use the words “partial de-indexation” when talking about modifying the old COLA formula?

    Hell if I know.

  • Gotchaye

    Median income for men has been basically flat since 1970*.  That’s awfully hard to explain as anything other than real wages being as low as they can be at any particular time.  Obviously the bad news there is that all gains from productivity increases haven’t gone to the median earner, but the relatively good news is that income has basically kept up with inflation.  Since the financial crisis this has not held, but that’s because of what I’ve been talking about – there’s a relationship between the unemployment rate and real median income.  Go google some graphs – the peaks of one do a really good job lining up with the troughs of the other.  When the unemployment rate increases, wages will increase more slowly than inflation, whatever the inflation rate is.  When the unemployment rate decreases, wages will increase more quickly than inflation.  We have a lot of unemployment right now and real wages are still adjusting downward.

    If you want the median worker to get a larger slice of the real pie, they need more bargaining power, and the easy way to provide that is to lower unemployment.  Hence inflation.  I’m also for a higher minimum wage, but that’s a bottom 20% fix to a bottom 80% problem.

    I hesitate to ask, but how did blind consumerism get us into this mess?  I would have said the problem was out-of-control debt securitization.

    *Household income has gone up, but this is because of women entering the workforce.  And household income has only gone up as household hours worked have gone up.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    “but the relatively good news is that income has basically kept up with inflation. ”

    ?? Yeah that’s why people are working 3 jobs and are still in debt because everything is just as cheap is it was prior to 1970. anyone think prices are reasonable? gas, food? 

    “We have a lot of unemployment right now and real wages are still adjusting downward.”

    more inflation is going to exacerbate that not help it. stagflation

    blind consumerism was in response to your saying what we needed was people to spend rather than save. People need to save, people need to be prudent, people need to rearrange their whole way of thinking abuot money back to common sense like don’t spend more than you have.

    Ellie- His model/ idea is that the added money in the system will naturally cause wage rates to go up.  One, no they won’t wages have been stagnating for most and for the ones that haven’t they’ve gone up much higher than the rate of inflation. two, if you are unemployed and there’s inflation you are just more screwed. 
    Lori- you made so many deep points there give me a couple weeks to prepare a response

  • EllieMurasaki

    Yes, wages have been stagnating. That is why we need to raise the minimum wage so it is a living wage, then pin it to inflation so minimum wage stays a living wage.

  • P J Evans

     How about you spend part of that reading about basic economics?

  • Gotchaye

    This is just dangerously misguided.

    First, it’s not clear to me whether or not you’re actually denying that real wages have pretty much kept pace with inflation since about 1970, or if you’re only making a claim about the last few years, even though I’ve been talking about how high unemployment cause real wages to drop.

    Second, you don’t understand stagflation.  The problem in the 70’s was a huge increase in the price of oil rather than simply a demand shortfall.  You can’t just put everyone back to work with stimulus for a supply-side recession because the raw materials that they’d be using to work just aren’t there.  What’s so frustrating about the current recession is that it’s optional.  If we were so inclined, we could even invest now in trying to avoid a potential repeat of the 70’s by building up an alternative energy infrastructure (especially a nonportable one; Keystone won’t help because oil is easy to ship), killing two birds with one stone.

    Third, I understood that you were characterizing my suggestion as blind consumerism.  What I didn’t understand was why you blamed it for our problems now.  Further, have you heard of the paradox of thrift?  Individuals tightening their belts in a recession is good for individuals, but if everyone collectively tightens, incomes drop.  That’s deflationary, produces unemployment as businesses downsize due to lower demand (it’s frugal!), and is just in general Very Bad.  This is a huge collective action problem, which is why we need government intervention to enforce collective belt-loosening.  Some argue that in general this is mitigated by increased savings in banks being available to others as loans, causing interest rates to fall.  But it is not possible right now for nominal interest rates to go significantly lower – you can’t have a negative nominal interest rate; no one’s going to pay you to take their money.

    Last, how are the unemployed screwed by inflation?  This is probably the group that’s most likely to have more dollar-denominated debt than dollar-denominated assets.  Student loans, mortgages, and credit card debt all count.  There’s no way you can believe that the typical unemployed person has more money in the bank than they have on their mortgage and credit card.  Mortgages are practically the first things people take out when they manage to have much money in the bank at all.

    So we’re clear, the reason the above matters is that inflation doesn’t just devalue dollar bills; it devalues anything denominated in dollars.  If you have $100k in debt and no income, 5% inflation is basically giving you $5k each year in real money, no strings attached.  Now, it’s true that if inflation at some level is expected, interest rates will generally be higher to compensate for that, and so there’s no net advantage for people who are taking out new debt or who have adjustable rate mortgages, but, again, interest rates are stuck at the zero bound, so this wouldn’t be a problem.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    I tried explaining this to Chris Hadrick before, he didn’t seem to get it.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie- that wouldn’t help people who don’t make minimum wage.  

    gotchaye- I’m denying that wages have kept pace with inflation yes. You’re assessment of the problems with stagflation is wrong. No one believes in the Philips Curve anymore. Ask Paul Volcker why he did what he did, it wasn’t oil. 

    “Further, have you heard of the paradox of thrift?”

    myth   

    “This is a huge collective action problem, which is why we need government intervention to enforce collective belt-loosening.”

    reverse Robin Hood to avoid a neccesary correction great idea. 

    “Last, how are the unemployed screwed by inflation?  ”

    If you don’t have a job you’re screwed, if everything now costs more you are even more screwed. It’s rather sinister actually.

    “If you have $100k in debt and no income, 5% inflation is basically giving you $5k each year in real money, no strings attached”

    Why would we want to incentivize debt?

  • JustoneK

    He’s for austerity, folks, and says Keynesian stuff is a myth.  Thread over, I’d think.

  • Gotchaye

     So, Chris, what happened?  Why did a housing crash in the US trigger a massive global recession?  How is it that unemployment hit 10% in the US (and much higher elsewhere)?

    You’re saying that was all a “necessary correction”?  That’s a little hard for me to believe – unemployment has since gone down a bit, and lots of the new jobs are the same as the jobs that got lost.

  • P J Evans

     He doesn’t seem to understand economics. Or much else, really. (Something like a post turtle.)

  • EllieMurasaki

    It would help people who make less than a living wage. It would help the people making a little more than a living wage, because to continue to show that they’re worth more than minimum, their pay would have to go up. It would help the unemployed, because with people spending more money, there would be more money going to businesses, which would need more people to provide the goods and services the money pays for. And it would–not at first maybe, but it would–help the businesses and those who profit from them, because they’d be taking their share from a bigger pie.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    I’m going to reproduce something I said to Chris Hadrick once before.

    Earlier Keynesian economics didn’t account for the possibility of stagflation because it did not distinguish between demand-pull inflation and cost-push inflation, largely because cost-push inflation had never been seen before.– Chris Hadrick

    I wouldn’t say they “had never seen it before”, exactly.

    It’s just that it went under a different name: They called it a
    price-wage spiral, and I’ve seen texts on wage and price controls from
    the 1950s that recognized that a situation could exist of limited supply
    (brought about by government intervention in wartime) triggering off an
    inflationary episode of prices dragging wages up as both went round and
    round.

    I would call it more of a blind spot among American Keynesian
    economists that had to with failing to recognize, in a word,
    institutions outside the US. Failing to recognize that along with
    monopoly pricing power by companies there could be monopoly pricing
    power by states or quasi-states in a major commodity.

    The textbook response was to use wage and price controls, but the crucial difference here is that the US government itself was not
    the agency generating the inflationary spasms of the 1970s. It was
    OPEC, in collusion with oil companies*, and as a result they had no
    interest in cooperating in ways to damp out the initial inflationary
    shock.

    Contrast this with WW2 controls, in which the US government itself
    was generating the inflationary cycle and could adjust the entire US
    economy and the apparatus of wage and price controls to compensate.

    The supply-siders were just extremely wildly hyperbolic about what
    their theories could accomplish, but the basic idea of trying to expand
    supply relative to demand is not something that is inimical to the
    teachings of Keynesian economics in some sort of fundamental way.

    * who do you think maintained all the technical infrastructure? Sure wasn’t the locals.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Oh yeah, if anyone cares, the original of the above was from this here nine-page comment thread. Yes, Chris Hadrick’s scintillatingly incisive commentary is all over it, too.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    ” So, Chris, what happened? ” Federal Reserve induced bubble in housing. “Why did a housing crash in the US trigger a massive global recession?”
    derivitives  

    “You’re saying that was all a “necessary correction”? ”

    you’re saying it wasn’t? Do you thin housing prices should have continued to go up??

    “nd lots of the new jobs are the same as the jobs that got lost.”

    not at Lehman bros

    Considering all the recent innovations in the internet and whatnot we should be experiencing deflation, lowering prices, wages and so forth. They just keep pumping them money in. All it does is redistribute wages upwards

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Considering all the recent innovations in the internet and whatnot we should be experiencing deflation, lowering prices

    Well now

    Anecdotally

    486DX-40 + 4 megs of RAM + Western Digital VESA card + 340 meg HD + 14″ monitor + other doodads ~= $2000 in 1994

    i7 950 + 16 gigs of RAM + Radeon 6950 + 24″ monitor + 4 hard drives all 1 TB or larger + random other crap ~= $1000 in 2012 (admittedly, some of this stuff is used, but still.)

    More power, for half the price

    I call that deflation in electronics prices.

    Wages get redistributed upwards under the kind of tax policies you want, or did Reagan and Shrub not teach you a damned thing?

  • P J Evans

    Giving you another data point:
    8086, 1 meg of RAM, 30 meg disk drive, 2 5-inch floppy drives, monitor: about $1500 in 1987.

  • Gotchaye

    You’ve completely missed the point, unless you’re claiming that the US unemployment rate going from 5% to 10% was driven by something like 6 million job losses at Lehman.  For my part, I had no idea that about 25% of all jobs in Spain were in finance. Clearly the US educational system is worse than I’d thought if 50% or so of Spanish youth were working in finance before the crash.

    Housing prices falling was a necessary correction (although they overshot).  I was asking about the massive global recession that followed.  Why didn’t that all sort itself out much faster?  What story do you tell to explain that that doesn’t imply that Keynesianism is basically correct?

  • http://twitter.com/lesterhalfjr Chris Hadrick

    You are illustrating my point. not only are the machines cheaper but the useless entities these replaced are gone. We should be enjoying deflation. Instead the jabberjaws in Dc and on Wall Street are priming the pump constantly. 

  • P J Evans

     Thereby demonstrating that you don’t have a fucking clue about reality.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie- pure conjecture on your part. I could point out raising minimum wage typically raises unemployment but I won;t even bother. You want the minimum wage to be higher that’s fine but to pretend it’s a panacea for the larger economy is silly. 

    gotchaye- I’m not implying all the jobs lost in the recession were in finance, my point was not all jobs are going to come back nor should they.  no one suggested baliing out pets.com and all those sites that went under in the internet bubble.

    relying on the moral judgement of MONEY LENDERS rather than signals from interest rates is a pretty obvious path to disaster. 

  • EllieMurasaki

    Pure conjecture on your part, you mean, since no one has actually ever tried simultaneous enforcement of ‘minimum wage a living wage’ and ‘increased labor costs need as far as possible to reduce profits, not increase prices’ and ‘being unable to pay a living wage to any employee is not a legal reason to fire any employee’. Or even any of the three individually.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Ellie- pure conjecture on your part. I could point out raising minimum
    wage typically raises unemployment but I won;t even bother. You want the
    minimum wage to be higher that’s fine but to pretend it’s a panacea for
    the larger economy is silly.

    And I’ll reiterate something I said on another thread:

    That is a static, microeconomic picture that takes no account of
    changing conditions which could conceivably set the market-clearing wage
    above the minimum wage.

    Consider the late 1990s. Unemployment was reaching below 4% and it was getting to the point where in some places they were hiring  at McD’s for several dollars above the minimum wage just to keep people.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    neutrino – exactly. that’s the ideal.  We WANT people to get higher wages and we certainly want McDonalds and companies like that to pay them higher wages. 

    Ellie- economics is a social science you don’t have to try things out to know if they’ll work, there are laws.   The type of business environment you’re suggesting would send any entrepenour over the border in 5 seconds. 

  • EllieMurasaki

    Yeah, which is why countries with a negative income tax have even worse economies than we do.

    Wait.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    neutrino – exactly. that’s the ideal.  We WANT people to get higher
    wages and we certainly want McDonalds and companies like that to pay
    them higher wages.

    Which is not going to happen as long as the McDonaldization of the job market continues – that is, the tendency to shuttle the majority of university graduates into retail-sector jobs requiring minimal training and paying minimal wages while holding out the luck-o-the-draw of good jobs to the fortunate ones.

    This only gets worse with economic policies that purposely aim for higher unemployment, which is usually what rentier-class folks want, because the same policies that protect the value of their wealth also tend to weaken the economy.

    Canada has actually been a nice little hothouse lab for exactly the above – which goes under the general term “monetarism”. Result: Until oil and other commodity prices turned around Canada’s fortunes, we persistently had an unemployment rate two to four percentage points higher than the USA’s, and a currency that slowly lost value against the US dollar for a decade.

  • jekyllisle

    Amazing, never has a period of human history happened when we as a world face the population shift we are currently seeing and every moron with a keyboard wants to neglect what is staring them in the face.

    Almost every Europeon (spelled on purpose) country is in the throes of economic chaos because the older population that paid for the generation before is now retiring and the younger generation behind that older population is not big enough to support it.

    It is basic math and it is exactly what is happening to Social Security. As for fools who say we have been here before WE HAVE NOT.

    In 1912 with the majority of the workforce being agricultural and shifting to industrial it could be done due to technology, the Social Security problem can NOT be fixed with technology it can only be fixed with more money.

    Here is a fact: There are 78 million Baby Boomers who are starting retire & collect Social Security. THERE ARE ONLY 46 MILLION GEN XERS TO PAY FOR THEM.

    WHY IS THIS SO HARD TO COMPREHEND????

  • http://blog.trenchcoatsoft.com Ross

     …

    There are 78 million of them…

    And they are immortal.

    Look, seriously, unless you are arguing that Boomers are immortal, you need to shut up, because some of us have actually done the math.

    Social security is not going broke. The social security trust fund isn’t even going broke.

    The mathematical predictions which say Social Security’s trust fund will go broke are mandated by law to be far more pessimistic than is even vaguely reasonable. The idea of social security going broke requires, essentially, that the economy do worse for all of the next 20 years than it ever has for a period that long. Could it happen? Not outside the absolute realm of possibility I guess, but if the economy does so badly that social security fails — no one is going to care because  civilization will have collapsed into some sort of Mad Max hellscape and we’ll have eaten all the aging boomers.

    And seriously, can’t we get beyond thunderdome?

    (Boo-yah! The Coveted ‘Beyond Thunderdome’ joke!)

  • jekyllisle

    Moron they don’t have to immortal they just have to take on average $30k per year each, which they are doing.

    Then the logical question adults ask is how are 46 million people who are earning even less than the generation before pay for it.

    Really dumb people like yourself will say the government will take care of it by printing more money.

    Mouthbreathers like yourself are not helping the issue.

    The government can mandate that everyone gets $1 MILLION a year for life, that doesn’t mean it can happen.

    Realize that when you put that Obama decal on your car all you did was tell the grown ups who the child who can’t logically think was

  • jekyllisle

     

    Amazing how in today’s educated world there could be such
    deep thinkers as to say “it doesn’t matter how big one generation is over the
    other as long as there is someone we can take money from Social Security will
    continue”.

    The dumbfounding fact that this author of such a brilliant
    quote must realize comes as more of a logical question, “How can the younger
    generation, Generation X, which totals 46 million people possibly pay for the
    Baby Boomers which total 76 million people”?

    Is the government going to take all Generation X’s money and
    give it to the Baby Boomers?

  • http://blog.trenchcoatsoft.com Ross

    The dumbfounding fact that this author of such a brilliant
    quote must realize comes as more of a logical question, “How can the younger
    generation, Generation X, which totals 46 million people possibly pay for the
    Baby Boomers which total 76 million people”?

    A generation is generally defined as about 20 years.

    Number of people in Generation X: 46 million
    Number of Baby Boomers: 76 million

    Percent change: -39.5%

    Dow Jones Industrial Average December 31, 1992 (closest to 20 years ago I could get without paying for data): 3301.1

    Dow Jones Industrial Average March 8, 2013: 14397.01
    Percent change: 336%

    So I’m going to go with “46 million people can pay for 76 million people because the economy has grown by almost ten times as much as the difference in the population.”

    With an aside of “Even at the height of the 2008 economic crisis, the economy was still more than twice as big as it was in 1993″

    You should try learning how math works.

  • jekyllisle

    Really thunderbolt, 46 million people can pay for 76 million?

    Your math must make you an Obama supporter

    78 million taking at least $30k from Social Security and another $5k on average from Medicare each year with that amount being adjusted upwards due to inflation and 30 million less people will not only support that but also the market & the government.

    Your stupidity knows no boundaries

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    There is this little thing known as “productivity”

    which means

    “output per worker”

    even in today’s world where the wage-productivity link isn’t as strong as it used to be, it still holds up somewhat and to think that US society in your scenario would be incapable of producing the necessary income and wealth to sustain more dependents relative to workers is really misoverestimating things.

  • P J Evans

     I’m going to have to remember ‘misoverestimating’.

  • jekyllisle

    So by your great logic then there really is nothing to worry about with Healthcare and that Obama Care was nothing but an overreach by the government

    You can’t have it both ways

  • http://blog.trenchcoatsoft.com Ross

     I’m sorry, could you rephrase that as not gibberish?

  • jekyllisle

    Hey tardo http://www.census.gov/hhes/www/income/data/historical/people/

    Can’t wait to read the nonsense that you reply with, even from your own religion, the government, shows things like facts which proves your public education don’t mean squat

  • P J Evans

    Your thickheadedness is impressive.
    You don’t know how Social Security even works, and you’re telling people how to fix it.

    By the way – the ‘Boomers’ paid for their parents and grandparents.

  • jekyllisle

    And they outnumbered and made significantly more than the both of them combined

    Don’t throw stones when you are too dumb to even know what a rock is, thunderbolt.

    And yes, SSI is supposedly paid for through deductions from pay and the government has been growing said payments from ages 62 to 70 at over 7% rate of return.

    I ask smart guy, where did the government get that return?

  • http://blog.trenchcoatsoft.com Ross

     Aw. You’re precious. You’re one of the dupes, arent’ you? Republicans making less than $250k per year? Who think you’d actually benefit if we privitatized social security, when actually, you’d get to learn the joys of living off of cat food?  You guys are PRECIOUS.

    And they outnumbered and made significantly more than the both of them combined

    Lex, want to take that one?

    http://www.youtube.com/watch?v=tRVUOGUmxJI&feature=youtu.be&t=7s

  • Lori

    I saw an article recently that talked about what a disaster 401(k)s have been & how they don’t do what they were intended to do. My response was that they do exactly what they were intended to do—-make sure that those least able to afford it bear the greatest burden of stock market losses and transfer large amounts of wealth from the many to the few. I’m not exactly sure why people don’t get this.

  • P J Evans

     IRAS didn’t get enough money into the market for them, so they came up with 401(k)s. And then crashed the market.

    There are people who have a bazillion dollars now, and they don’t believe anyone else deserves anything.

  • jekyllisle

    Are you one of those trolls for Obama that believe with all your heart that he will swoop down the chimney and save you?

    You are entering a world of facts – as a libtard that word fact scares you doesn’t it?

  • AnonymousSam

    You seem to be having difficulty writing a sentence that doesn’t end in ad hominem. Are you sure you have room to be calling anybody a troll?

  • jekyllisle

    Yes, Ross I do especially when you register under another name.

  • AnonymousSam

    Click our avatars and take note of the post histories. Ross and I are completely different people, each of whom with a long established presence on this blog.

  • jekyllisle

    touche

  • http://blog.trenchcoatsoft.com Ross

     libtard
    thunderbolt
    Moron
    Mouthbreathers
    tardo
    thunderbolt again.

    Why don’t you call me a faggot so I can at least get bingo out of this conversation?

    Let’s see. I used math. You used ad hominem attacks and slurs against the mentally handicapped.

    Khan, I’m laughing at the “superior intellect”.

    You know, if I, like you, had basically no argument and just wanted to bully anyone who said differently by spewing hateful, abelist garbage, I would at least be able to avoid using the same insult twice and use two separate slurs against the mentally handicapped, you brainless, talentless, mush-minded, mealy-mouthed, asshat-wearing, fuckwitted, dumbassed, shit-for-brains douchenozzle.

  • jekyllisle

    So the math that you used factor in the fact that incomes are decreasing not increasing?
    Your math took into account that the average Social Security check for roughly 78 million people will equal in one month what the “Fund for SSI” has in total?
    You factored in the glaring 30 million less lives paying into the system, at less wages and more taxes?
    After all this logic, facts & math you are still saying that Social Security has no issue.

    I would not insult a pack of smokes to write that you are an equal, so no I don’t use that term.

    I can use hominem attacks because you sir a fool, and not once have you explained why other than it’s a government law that dictates SSI is fine.

    And by the way it is, but you are to obtuse to know why – just look at Medicare tool, the problem is solved but you are way to blind to see the truth

  • http://blog.trenchcoatsoft.com Ross

    You factored in the glaring 30 million less lives paying into the system, at less wages and more taxes?

    And we’re done. Taxes are lower now than they were for the boomer’s productive years. If you’re not going to stick to actual facts, I see no point in going on.

    The social security trust fund is predicted to run out in about 34  years.  Just like back in 2007, it was predicted to run out in about 34 years. And in 1997 it was predicted to run out in about 34 years. And in ten years, they’ll do the calculations again and tell us that, shock, horror, the social security trust fund will run out in about 34 years.

    Since I’m so stupid, explain to me how a 40% reduction in the size of the workforce* will result in the economy shrinking by 400%.  Because that is what would have to happen in order for those fewer working people you say we’ll have to result in a net decrease in the economy relative to mid 90s levels.  Absent that, what magical process do you forsee that will cause the much larger economy to somehow result in the government collecting less for the social security fund?  How is it that the economy could grow by 300% and yet the amount of money going into the social security fund goes down by more than 40%**?  Are the boomers all working 10 jobs each, so that when they retire the Dow will suddenly drop ten thousand points?

    (* Which is bullshit, since Gen X is expected to surpass the size of the Boomer generation in 2030, which is before all the Boomers will have retired, and in the mean time, the Millennials will all have been in the workforce for a decade, and there will be 50% more of them than Boomers by that point.  But hey, why let facts get in the way.  There will be a brief period where the size of the workforce does go down, some time between 2020 and 2025, but it won’t be a 40% drop unless a whole bunch of Millennials drop dead)

    (** Insofar as the problem actually exists and isn’t just a clever fiction played up by lying douchebags in order to destroy social security, the problem does follow directly not from the size of generations or from the number of retirees versus the number of workers. It proceeds directly and completely from the fact that real wages have not tracked with economic growth. Which means that raising the social security cap will completely fix the problem. But raising the minimum wage would also completely fix the problem and also fix a whole shitload of other problems. You are free to keep shouting that social security is in crisis and that the solution is to double the minimum wage.)

  • P J Evans

     There are a whole lo0t of boomers who are good with raising the cap – I want it raised to about $250K and indexed to inflation – and with raising the minimum wage. Because having enough money to live on is a damned good idea.

  • EllieMurasaki

    Hell with raising the cap! ELIMINATE the cap!

  • jekyllisle

    Wow you are a child

    “Which is bullshit, since Gen X is expected to surpass the size of the Boomer generation in 2030, which is before all the Boomers will have retired”,

    I guess all of a sudden we are either making more 40 year olds or somehow magically we are going to pump everyone’s salary and NO inflation is ever going to happen.

    Face it you are wrong in every aspect and no raising anything would just lead to less revenue going in other areas like welfare, the military, Medicare or have you forgot about those bills too?

    The problem isn’t just SSI, it’s government spending across the board & there isn’t enough to take from the next generation to sustain what is presently set.

    Why is inflation so hard for you to grasp?

  • EllieMurasaki

    Funny, because my pay stub has one section for funding Medicare/Social Security and another for funding all the rest of the federal government stuff. Changing one doesn’t affect the other. Also funny, because if we made it so that it wasn’t possible to pay all of one’s OASDI tax out of the earnings from playing in one’s first pro ball game of the year (raising the cap or eliminating it entirely), there wouldn’t be any Social Security funding problem.

  • Lori

     

    I guess all of a sudden we are either making more 40 year olds  

    No, we will not be making more Gen Xers. We will however have fewer Boomers, because some of them will die. In spite of the determination of some people to believe that the Boomers are immortal, the oldest of them will start dying in significant numbers before the youngest of them even reach retirement age. This is not particularly hard to understand.

    Someone who calls other posters “tardo” should probably work a bit harder on being clever. Not that I expect much from someone dimwitted and crass enough to call another poster ‘tardo”.

  • http://blog.trenchcoatsoft.com Ross

    I guess all of a sudden we are either making more 40 year olds or somehow magically we are going to pump everyone’s salary and NO inflation is ever going to happen.

    If you don’t choose to accept official census data, then please cite a source. Here’s a hint: the most boomers who ever lived were alive in 1964. In 1965, there were fewer boomers alive than in 1964. There are many fewer boomers alive now than in 1965. 12% of all the baby boomers who ever lived are already dead. ANd shock of shocks, death rate isn’t linear. Some time around 2025, that number reaches 50%. Meanwhile, the most Gen-Xers who ever lived were alive in 1980. They’re slowly dying off too, but not so fast as the boomers. Your average boomer has less than 20 years left to live, but the average Gen-Xer has another 40 years coming to them. Which means that your mythical “78 million boomers” who you expect to retire and destroy SSI? Well, they represent 88% of all the boomers who ever were, and half of all boomers will be dead in 2025, so we’re really only talking about 44 million boomers. Oh look at that — 44 is less than 46.

    Why is inflation so hard for you to grasp?

    It’s hard because my mind is all cluttered up with actual knowledge of real facts and how to do math, instead of enjoying the eternal sunshine of a mind empty of anything but debunked and dishonest right-wing talking points.

  • jekyllisle

    Okay tells us how inflation works – I am hoping your degree from DeVry will finally show something other than bs that you spew.

    Explain how Fractional Banking, coupled with the Reserve Rate add to inflation and then explain how inflation doesn’t tax the middle class and poor – something you apparently believe in.

    You have not provided one shred of actual fact but I shouldn’t expect anything from some nut bag who believes that half of the Boomers will be dead before they reach age 73.

    You do realize that the chunk of the Boomers are just 55 years old?

    Again you believe that half of these people will be dead before the reach their 70’s

    Again you are a child that shouldn’t be listened to or recognized.

    You logic is based on hoping that people die, unlike you logical people base projections on facts and history.

    Life expectancies from any actuarial firm in the country have already been risen to reflect the change in lifestyle & medical advances over 5 years ago.

    Again, facts please prove something or go away – you are a very boring/tiresome person to have to educate, it is better off that you know nothing so you won’t realize what you don’t have.

    Still amazed that wishing and hoping people die is the basis for the math that is being used – wow, do wear a helmet?

  • EllieMurasaki

    Are you seriously saying that we should plan Social Security based on achieving immortality?

  • jekyllisle

    Nice to see that you can read and comprehend – your education is working over time.

    Life expectancies are rising well past the numbers Ross have provided and the statement made was to age 85.

    I guess in your world that is immortality

  • EllieMurasaki

    …you’re actually suggesting we should figure our Social Security based on no more Boomers ever dying.

    Fuckwit.

  • jekyllisle

    Nice reply there retard – how about age 85?

    Is reading not your strong suit or is it understanding letters put together that create long variations of words?

  • EllieMurasaki

    So we should figure on all the Boomers dropping dead at age 85 and not a single one between now and then?

  • jekyllisle

    Again, no.

    The original post to what you jumped in was Baby Boomers today have roughly a 75% chance of living until age 85.

    You can easily plan on some of them passing away before then but to state that more than half will by 2025 in 13 years is asinine.

    Do you need the actuarial data on longevity?

    You might want to take a look at a recent article that highlights that even though Boomers are unhealthier than generation before they are living longer

    http://abcnews.go.com/blogs/health/2013/02/05/baby-boomers-living-longer-not-healthier/

  • EllieMurasaki

    How old’s the youngest living Baby Boomer? How old’s the oldest?

  • jekyllisle

    The oldest is 65 the youngest is 49 the largest segment of Boomers, over 4.1 million births per year from 1955 to 1964

    There are roughly 40 million people between the ages of 49 & 58 – they are not going to die off in the next 20 years

  • EllieMurasaki

    And how many people are there between zero and twenty right now? http://www.childstats.gov/americaschildren/tables/pop1.asp says seventy-six million under-eighteens in the US right now. They’re not gonna die off en masse in the next twenty years either. What the hell is your math problem?

  • jekyllisle

    And how much money are they producing that can be taxed and used for services to fund the government?

    About zero.

    So your math problem is Zero X 76 million is …..

    And before you can make the ridiculous argument that EVENTUALLY those zero to 20 year olds will earn enough money to pay for the Boomers wages are going down while inflation on food/energy is increasing by leaps & bounds

    So math wizard, how do those wonderful 76 million afford to write a check for Medicare, Social Security, and federally funded pensions for the next 20 years.

    I suggest you go back to 8th grade and take an economics class

  • EllieMurasaki

    So your solution is to increase wages and to increase the proportion of wages going into Medicare and Social Security by removing the cap on how much income per person can be taxed for Medicare and Social Security? Excellent! All for it!

  • P J Evans

     16-to-18 years DO work – when they can find jobs.
    What part of this do you not understand?

  • jekyllisle

    That is your answer???? That is all you could come up with????

    Are you that stupid????

    16 to 18 year olds do work – are you suggesting that a minimum wage job can fund Social Security, Medicare, the military, the federal government, local governments, state governments, municipalities, infrastructure along with enough to still buy goods & services from the private sector

    Consider this conversation over, you are friggin out there and bless anyone that has to help you later in life

  • EllieMurasaki

    So you’re suggesting minimum wage should be a living wage? Excellent! I’m on board!

  • jekyllisle

    Are you 15 years old???

    Are you now stating that 16 to 18 year olds are earning $50k a year???

    Again you are an idiot

  • EllieMurasaki

    I’m fine with teens earning under a living wage. But if Social Security tax on a nation of minimum wage earners isn’t adequate to fund Social Security–and I see no reason that might be false–then minimum wage needs to be higher.

    Your problem is that you keep saying X the number of dollars paid in to Social Security 10Y because the population’s not shrinking and the economy’s grown.

  • jekyllisle

    If you raise minimum wage then you inflate expenses on the employers paying them which increases the costs of goods which taxes the middle class & poor even more

    Do you have an economics or finance background at all

  • EllieMurasaki

    So index minimum wage to inflation and provide incentive for businesses to cut profits instead of raising prices.

  • jekyllisle

    Looks good on paper, but unfortunately with business pegged to the Stock Market and to shareholders the ever demand for more profits is the real motivator.

    Your idea is great, the problem is greed

  • jekyllisle

    Wow even the Huffington Post wrote an article on how birth rates are going down http://www.huffingtonpost.com/2012/10/03/birth-rate-in-us-down-fourth-year_n_1935143.html

    Even the CDC chimed in http://www.cdc.gov/nchs/data/databriefs/db60.pdf

    So it looks like Childstats may be correct for the current years, but future projections are a tab bit off.

    Apparently there will be another Baby Boom and a great period for the US again since those Gen Xers won’t be a burden on this Baby Boom and there will be plenty of money for them.

    As for today’s Baby Boomers, well your math should be able to fix it all

  • EllieMurasaki

    The population is not shrinking.

    The economy has expanded by an order of magnitude.

    Social Security is not going to be in trouble anytime soon. Or it won’t be if we take the cap off such that people are paying Social Security tax on their millionth dollar of the year same as on their first.

    What part of this is difficult to comprehend?

  • jekyllisle

    Aren’t you cute trying to now spin it – ahh

    I never said the population was decreasing, I pasted information of a decreasing birth rate from Huff Post, I also stated that there wasn’t enough Gen Xers to pay for the Baby Boomers.

    Your reply was that the problem is fixed because 16 to 18 year olds work.

    Again nice try in the attempt to spin it ain’t flying.

    As for taking the caps off what part of wages are going down while inflation, local taxes and expense are going up.

    Where is the money going to come from, let me guess you are going to write the 16 to 18 year olds or that we are going to grow it so there is nothing to worry about

    By the way the problem has been solved you just haven’t looked at Medicare

  • EllieMurasaki

    As for taking the caps off what part of wages are going down while inflation, local taxes and expense are going up.

    Who’s having comprehension problems now?

    Income for the people making enough above the cap to begin with is going up. That cap’s up like $107K. Take the cap away so that somebody making $108K pays SS tax on all of it instead of just the first $107K, so that somebody making $1M pays SS tax on all of it instead of just the first $107K…

  • jekyllisle

    Wow take the caps off a real solution because last time your facts came out there was 50 trillion people making a million dollars a year.

    It still doesn’t solve the problem, there isn’t enough bizzalloinaires in the country

  • EllieMurasaki

    One percent of the country has forty percent of the wealth. Factor taxing *that* into your equations.

  • jekyllisle

    That wealth is not in the form of income – try prying away savings, life insurance from them

    Anything else???

  • EllieMurasaki

    …right.

    Okay, I give. Social Security’s fucked, despite all evidence to the contrary.

    What’s your solution? What do you propose we do to ensure that every retiree has enough money to live on?

  • jekyllisle

    Nice – what evidence do you have that SSI is fine?

    And I already said SSI was fine, you just haven’t looked at Medicare yet – that is how SSI will be paid for, have you looked at the CBO projections of the Budget, Medicare & SSI yet?

    When you do, you will see that the Budget & SSI flatline while Medicare goes through the roof and you do know that Medicare is now being means tested right?

  • EllieMurasaki

    What’s your solution? What do you propose we do to ensure that every retiree has enough money to live on?

  • jekyllisle

    The problem is the system is designed for them not to have enough money to live on.

    Medicare is now mandatory, means tested and the income that Medicare uses is everything from Wages, Social Security to your 401(k) and the sale of your home.

    The object is to get enough people into the income surcharge bracket and fund everything else, if the government bleeds retirees dry so be it, they can go on Medicaid.

    As for SSI, by the year 2047 most people won’t be receiving a SSI check since they will have to pay for their Medicare premiums through it.

    Ultimately, those with assets will find themselves not receiving a SSI check at all but still having to pay tax on it as though they got it

    And by the way if you run the numbers this impacts those people who only earned $50k a year for their entire life

  • EllieMurasaki

    Okay, that’s the problem. What’s your solution?

  • jekyllisle

    The only solution is to plan. For those that are 55 & younger they need to look at Roth IRA/401(k) investments and Life Insurance. Take the assets that are being earnmarked for traditional IRA’s & 401(k)’s and invest in Roth’s or Life Ins.

    For those 60 & older need to Annuitize assets so not to get nailed by the RMD rules at age 70 to keep their income low, they should also look at Reverse Mortgages and change their distribution model to use tax deferred assets first

    Those in between can go either way, it will come down to assets and time.

    For those that haven’t saved and that are in trouble, well they will still get aide from either State or Fed levels it just won’t be great aide.

    As I posted the deficit, SSI & even Medicare have been solved, no one of importance has stopped to look/say why yet.

    That will happen soon enough though and when it does people will finally see that this wasn’t some master plan by one man, it has been in the works since 2003

  • EllieMurasaki

    So basically people need to pour their money into the stock market and pray (to nonexistent gods) that it doesn’t crash again.

    Yeah, that’ll end well.

  • jekyllisle

    Hopefully the will never do that, hopefully they look to insurance, bonds, safety and income management

  • P J Evans

     You really are incredibly ignorant, as well as stupid.

    IRAs have been around for more than 30 years. That means that BOOMERS HAVE IRAs. And I can tell you, as many others could, that they lost 25 to 30 percent of their value when the market crashed in 2008, and that money isn’t going to magically reappear.
    BOOMERS HAVE 401(k)s, too. Those also lost 25 to 30 percent of their value, and THAT money isn’t going to magically reappear, either.
    At the same time, people at the top of the income charts, the ones who have 40 percent of all the wealth in the country, didn’t take a major hit to their retirment funds at all. Because their annual income is more than most of uns will make in a lifetime of work.

    Now, instead of telling people they have to get paid less to make owners happy, try to get it through your vacuum-packed brain that the people at the top are happy with the way the system works. They think you’re a useful tool.

  • jekyllisle

    Wow how dumb are you?????

    I suggest you educate yourself boy and figure out the truth – here is the what SSI even states “income is lines 37 & 8b of the IRS 1040” http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/1601/~/calculation-of-modified-adjusted-gross-income-%28magi%29

    You do know what a 1040 is right?

    It’s the thing that people with jobs get when they file their taxes.

    Again, you are moron who has no idea what is in store for you – God bless your parents for feeding you

  • jekyllisle

    Hey MORON you know what RMD stands for right? Say goodbye to what you think you have.

    As for the rich, why you so envious of others…did you get made fun of in gym class?

    Also, dummy really rich people pay themselves through Dividends, either through stocks or Life Insurance. Notice how Buffett doesn’t pay as much as his secretary – he funds his expenses through Life Insurance.

    To quote the Duke “Life is hard. It’s even harder when you are PJ Evans”

  • P J Evans

     We don’t need it. But you certainly do.
    People with lower incomes have shorter lifespans than people with higher incomes. What part of this do you not understand?

  • jekyllisle

    By the way great website you created or at least post, Patheos

  • jekyllisle

    Your avatar links to Patheos – it looks like a great site, is it yours?

    The info is overwhelming and whoever runs it is going a fantastic job

  • P J Evans

    The problem isn’t just SSI, it’s government spending across the board
    & there isn’t enough to take from the next generation to sustain
    what is presently set.

    Oh, look! Another idjit deficit hawk!

  • jekyllisle

    No you are right, spending more than we take in is fine everything will be alright, you loons are right. Greece Portugal Ireland, Iceland, France all have cleaner books that the US but no worries everything is going to be fine.

    Can’t wait for you fools to wind up on Medicare to see what is really going on

  • jekyllisle

    You don’t deal in reality do you, you have to watch superheros on tv to feel good about yourself, don’t ya?


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